Tuesday 2 March 2021
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Warning for Commercial Property

Various positive factors have backed up the strong demand for the commercial property market in Singapore. They include profitable investment opportunity and the stable business atmosphere as well as employment market in the country. As per the stat in the Q2 of 2014, there is a 90.4% occupancy rate for offices in the whole country and 94.1 for retail units.

In a country with such limited land, stocks for commercial properties with smaller investments continued to remain tight. This is because most properties under this category are owned by government or public organizations, Real Estate Investment Trusts, corporations and conglomerates, and private funds. In this sense, a parcel of land tagged as commercial property would be eyed by group of investors.

Investors who have been in the industry for long as well as individuals with considerable net worth try to earn income by leasing strata-titled commercial estates and long-term ownership. This is possible through capital gains earned by reselling the properties after their minimum holding periods.

The acquisition of strata-titled units in bulk would also lead to profitable gains by selling the units individually after sometime.

As shown by the previous wealth report of the country, the interest rate of commercial property among the wealthy is rising. 53% of the surveyed wealth advisers and bankers commented that Singaporean clients who are in the ultra-high-net worth category are looking forward to raising their investment in the commercial property in 2014 which ic relative to the 33% of residential property.

A report also said that the retail property rated to have the highest interest all over Asia’s UHNWIs out of the 11 classifications of commercial properties. This sector took the shared 42% interest in comparison with 2012’s 30% and global average of 24%; and, this is succeeded by office market then development land.

Family offices, private funds and property groups, and strata-titled commercial estates received more attention not only from sophisticated investors but even general public during the past couple of years.

The significant increase in the transaction volume and price margins showed the strengthening of demand on strata-titled commercial properties as attributed to the country’s economic recovery from the global financial crisis and increase in population. Thankfully, the cooling measures on the real estate market have led investors to turn their heads to this segment.

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