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.
- 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.
- 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.
- 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%.
- 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.
- 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. Also get an estimate of your monthly payments with our commercial property loan calculator.
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