When will I need a commercial property loan?

If you’re thinking of buying a commercial property, you might need a commercial property loan.

If you’ve been thinking about investing in commercial property in Singapore, a commercial property loan could help you reap the benefits of a property investment. Here are some great reasons to invest in a commercial property in Singapore.

  1. Price stability
     

    With the exception of industrial properties, commercial property – which includes retail spaces, HDB shophouses, strata-titled shops and commercial buildings – usually remains unaffected by government cooling measures. Unlike the residential property market, the commercial property market is not subject to additional buyer’s stamp duty (ABSD), which could save you a considerable amount as compared to a residential property.

  2. Greater rental yield
     

    The rental yield on commercial properties is around 5 percent, compared to 2-3% for residential properties. However, it is important to note that landlords will need to upgrade their properties from time to time depending on the tenants’ needs and requirements.

  3. Lower property tax
     

    Non-residential properties – such as commercial and industrial buildings – are subject to a flat tax rate of 10 percent of their annual value. This is generally lower than the tax rate on residential properties which varies from 0-20 percent, depending on whether it is owner-occupied or otherwise. In particular, owner-occupied properties can be taxed between 0-16 percent, while non-owner-occupied properties are subject to a tax rate of between 10-20%.

  4. Cheaper borrowing
     

    Funding your commercial property purchase with a commercial property loan could be an economical option in the grand scheme of things, as the interest rate on commercial property is typically lower than the interest rate on a personal loan. A DBS Commercial Property Loan gives you access to a suite of financing options at the most competitive rates, allowing you to borrow up to 80 percent of the property’s purchase price or valuation – whichever is lower – over a loan tenor of up to 25 years.

  5. Greater flexibility
     

    If you have registered a Special Purpose Vehicle specifically for holding commercial properties, you can enjoy greater flexibility when transferring ownership of your commercial property, as compared to when you sell a commercial property as an individual.

 

Applying for a commercial property loan is easy – all you have to do is fill in our online loan application. Be sure to have your supporting documents – such as NRIC, NOA, bank and financial statements – handy.


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