Singapore is a city-state with a vibrant economy. As such, you can expect that the property market in Singapore is also booming. Often times, foreigners are more exposed to the residential side of Singaporean property, and there are less attention paid to the commercial lots in general.
In recent years, the Singaporean authorities have been trying to decentralize the amount of commercial property in the busy city centres, and are encouraging more commercial sites in places like Woodlands and Jurong.
Basically, the commercial properties in Singapore are divided into two main categories, namely Retail Properties and Industrial Lots. Retail properties include shop lots and offices, whereas industrial properties include factories, warehouses and the like.
Commercial properties differ from residential properties, in that they seem not to suffer from a ballooning of prices, and are therefore less likely to be subjected to cooling measures and government taxes that impacts property investment in Singapore.
In general, retail properties, include:
Office spaces are divided into class A, B and C according to the amenities they offer. Grade A has the highest and classiest designs, security, lifts and other modern trappings, but also has the highest price. Office spaces become more affordable when they are located further from the Central Business District (CBD) of Singapore city. As Singapore is seeing a steady development of businesses, from large multinational brands to humble start-ups, you can be sure that there will be a steady stream of demand for office spaces.
Stratified retail spaces have existed in Singapore since the 1970s, and used to be concentrated around Orchard Road. However, there are now plenty of shopping malls dotted all over Singapore in order to cater to those in the suburbs and those living in HDB flats. The rise of these shopping malls outside the CBD means that there are more affordable units available. Also, newer malls tend to have a higher rental rate than older establishments.
Shophouses are heritage properties in Singapore, mainly found around Chinatown and Duxton Hill. Their unique designs make them a very highly sought after properties, especially for those who want to set up a standalone designer store. These shophouses are often renovated to have an updated interior, while maintaining a historical façade. Currently, there are more than 6500 shophouses in Singapore, which have been conserved, with no more new ones being built as the land usage policy doesn’t allows it. Demand remains high for these shophouses, which represents Singapore’s past.
Mixed developments are a very popular trend these days as it gives the developers more security when they diversify the types of units available. Mixed developments combine both residential and commercial units, and investors often favor the commercial units here, whether office spaces of retail outlets, as there is a high demand for it, especially seeing that there are adjoining residential properties, which will make the place very self contained.
The other types of commercial property in Singapore are the Industrial Lots. Industrial lots are generally divided into three classes, B1, B2 and Business Parks. Due to the scarcity of land in Singapore, large industrial lots are pretty expensive, but there are stratified industrial lots that are more affordable. Most of these industrial lots are tenured for 30 to 60 years, therefore rental yields tend to be higher.
In order to maximize returns of commercial property in Singapore, it is best to move in and secure a piece of property early on as their value will tend to appreciate over time, allowing you to reap maximum returns. Therefore, one strategy is to keep your eyes and ears peeled for new development for commercial or mixed properties on the island from time to time.