Singapore’s commercial property market presents compelling opportunities for investors and business owners in 2025 on how to buy commercial property in Singapore.
With residential property cooling measures driving up Additional Buyer’s Stamp Duty (ABSD) rates, more investors are turning their attention to commercial real estate.
This comprehensive guide explains exactly how to buy commercial property in Singapore, covering everything from initial research to final completion, making the process accessible for both local and foreign investors.
Commercial Properties in Singapore
Before diving into the buying process, it’s essential to understand what constitutes commercial property in Singapore.
Commercial properties in Singapore, which include retail spaces, industrial, and commercial buildings, and hotels, serve primarily for business operations and income generation.
Types of Commercial Properties
Singapore’s commercial property market encompasses three main categories:
Retail Properties:
- Shopping malls and complexes
- Shophouses (including heritage conservation shophouses)
- Individual retail units and ground-floor shops
- Food and beverage outlets
Industrial Properties:
- B1 spaces: Offices and warehouses suitable for light industrial use
- B2 spaces: Factories and heavy industrial facilities
- Logistics and distribution centers
- Technology and manufacturing hubs
Hotel Properties:
- Luxury hotels and resorts
- Budget accommodations and hostels
- Serviced apartments with hotel licenses
- Mixed-use developments with hospitality components
Each property type comes with unique characteristics, lease structures, and investment considerations that significantly impact the buying process.
Key Advantages of Commercial Property Investment
Understanding the benefits of how to buy commercial property in Singapore helps contextualize the buying process:
- No Additional Buyer’s Stamp Duty (ABSD): Unlike residential properties, commercial properties are exempt from ABSD, making them particularly attractive to foreign investors who would otherwise face a 60% ABSD rate on residential purchases.
- Higher Rental Yields: For residential property, rental yield typically ranges between 2% to 5% whereas for commercial property, yields are typically much higher at 5% to 10%. Recent market analysis suggests Grade A office rents could potentially gain 23% to 30% by 2025.
- Foreign Ownership Freedom: Singapore’s legal framework permits foreign investors to own commercial properties without the restrictions faced in the residential sector.
- Longer Lease Terms: Commercial properties typically offer lease agreements spanning 3-10 years, providing greater income stability compared to residential properties with 1-2 year leases.
Step 1: Financial Planning and Budget Assessment
The first step in how to buy commercial property in Singapore involves comprehensive financial planning.
Initial Budget Considerations
Start with the basics. You’ll need to check your budget amount, including understanding additional costs on top of the purchase price like stamp duty, taxes and legal fees. Commercial property investments require substantial capital, so accurate budgeting is crucial.
Purchase Price: Commercial properties range from several hundred thousand dollars for small retail units to tens of millions for prime office buildings or shopping centers.
Additional Costs to Budget:
- Buyer’s Stamp Duty (BSD): 1-6% depending on property value
- Legal fees: Typically $3,000-15,000 depending on transaction complexity
- Property survey and valuation: $500-2,000
- Goods and Services Tax (GST): 8% if buying from GST-registered entity
- Renovation and fit-out costs: Varies significantly by property type and condition
Financing Considerations
Unlike residential property purchases, commercial property financing operates under different parameters:
- Loan-to-Value (LTV) Ratios: Commercial property loans typically offer higher LTV ratios than residential loans. You can get up to 80% of your property’s value as a loan, sometimes even up to 90%.
- No TDSR Restrictions: It is worth noting that the Total Debt Servicing Ratio (TDSR) doesn’t apply for commercial property loans as businesses are not subjected to personal debt evaluation.
- Interest Rates: Commercial property loan interest rate is between 2.8% to 3.2% p.a., typically higher than residential rates but competitive for business financing.
Step 2: Market Research and Property Selection
Understanding Property Zoning
Each commercial property has its own intended use and guidelines, and this can be found on the URA Master Plan. Knowing its intended use is very important as it is difficult to change.
For example, if you want to change its use from retail to office and it has not been approved previously, you must first apply for planning permission from URA and wait for approval before undergoing the change.
Key Research Areas:
- Location analysis and foot traffic patterns
- Surrounding amenities and accessibility
- Future development plans in the area
- Comparable property prices and rental rates
- Market trends and demand indicators
Property Search Platforms & Professional Guidance
You can look through online listings such as aesthetichavens.com.sg, 99.co, CommercialGuru, and PropertyGuru to identify potential properties.
These platforms provide comprehensive information about how to buy commercial property in Singapore, including detailed specifications, photos, and contact information for listing agents.
Step 3: Legal Team Assembly and Due Diligence Preparation
Buying a commercial property in Singapore may work differently depending on the specific property, how it is zoned, the lease length, your nationality and your residence.
Essential Legal Services
- Commercial Property Lawyer: Specialized in commercial transactions and familiar with URA regulations, zoning laws, and commercial lease structures.
- Due Diligence Specialists: For complex transactions involving multiple stakeholders or significant assets.
- Tax Advisors: Particularly important for foreign buyers or those purchasing through corporate entities to optimize tax efficiency.
Due Diligence Framework
WLP can assist in conducting in-depth market analysis, identifying opportunities, and performing due diligence on shortlisted properties. The due diligence process typically includes:
Legal Due Diligence:
- Property title verification and ownership history
- Existing encumbrances, liens, or legal issues
- Compliance with planning permissions and building codes
- Review of existing tenancy agreements and obligations
Financial Due Diligence:
- Property valuation verification
- Revenue and expense analysis for income-generating properties
- Assessment of ongoing maintenance and operational costs
- Review of property tax assessments and payment history
Physical Due Diligence:
- Structural and building condition assessments
- Environmental impact evaluations (particularly for industrial properties)
- Compliance with safety and accessibility regulations
- Analysis of required repairs or upgrades
Step 4: Financing Application and Approval
Loan Application Requirements
Some of the basic requirements for on how to buy commercial property in Singapore loan include 30% ownership by a Singaporean citizen or permanent resident (PR). Additionally, your company should be incorporated for at least 12-24 months.
Individual Applicants:
- Personal income documentation
- Credit history and financial statements
- Business ownership details (if applicable)
- Property investment experience
Corporate Applicants:
- Audited financial statements (typically 2-3 years)
- Business registration and incorporation documents
- Board resolutions authorizing the purchase
- Detailed business plan and cash flow projections
Loan Terms and Conditions
Loan Tenure: Commercial property loans tend to have shorter tenures than residential loans. Most banks offer a loan tenure of 25 to 30 years for commercial property loans.
However, the remaining lease left on the commercial/industrial property if it’s leasehold will affect banks’ loan tenure granted.
Interest Rate Options:
- Fixed rates: Locked for initial period (typically 1-3 years) before converting to floating
- Floating rates: Pegged to SORA (Singapore Overnight Rate Average) from the beginning
Step 5: Option to Purchase (OTP) and Contract Negotiation
Securing the Property
Once you’ve identified your target property and secured financing pre-approval, the next step involves formal commitment through an Option to Purchase.
- Initial Deposit: Typically 1% of purchase price paid to secure the OTP
- Option Period: Usually 14-21 days to exercise the option
- Option Fee: Generally 1% of purchase price, which forms part of the total purchase price if the option is exercised
Contract Terms Negotiation
- Purchase Price and Payment Schedule: Negotiate final pricing and payment timing
- Completion Date: Typically 8-12 weeks from option exercise
- Conditions Precedent: Include due diligence completion, financing approval, and any required regulatory approvals
- Warranty and Indemnity Provisions: Protection against undisclosed liabilities or defects
Step 6: Due Diligence Execution
Comprehensive Property Investigation
Your legal team will complete full searches and due diligence processes. This can take a little time, depending on the nature of the property.
You may also want to have the property surveyed to ensure it is in good condition and to understand any maintenance issues.
- Title Searches: Verify clean title and identify any restrictions or encumbrances
- Planning Permission Review: Confirm current zoning and any pending applications
- Building and Safety Compliance: Ensure all required certificates and approvals are current
- Environmental Assessments: Particularly important for industrial properties
- Tenancy Review: For properties with existing tenants, review all lease agreements and tenant obligations
Risk Assessment and Mitigation
The due diligence process aims to identify and quantify risks associated with the purchase:
- Financial Risks: Unexpected costs, poor investment returns, market volatility
- Legal Risks: Title disputes, regulatory non-compliance, contractual obligations
- Physical Risks: Structural problems, environmental contamination, maintenance requirements
- Commercial Risks: Tenant defaults, market changes, zoning restrictions
Step 7: Financing Finalization and Documentation
Final Loan Approval
Based on successful due diligence and property valuation, banks will provide final loan approval with specific terms and conditions.
Loan Documentation:
- Formal loan agreement with detailed terms
- Security documents including mortgage over the property
- Personal or corporate guarantees as required
- Insurance requirements and beneficiary arrangements
GST Considerations
If you are buying commercial property from a GST-registered company, you will need to pay 8% GST. The GST charge must be absorbed by you if you are buying as an individual or on behalf of a non-GST-registered entity.
Step 8: Option Exercise and Formal Commitment
Once all is in order you can exercise your OTP to set a completion date. Again there will be another small deposit to pay, and you’ll need to sign initial paperwork with your legal representative to protect your interests in the sale.
Exercise Requirements
- Additional Deposit: Typically 4-9% of purchase price upon option exercise
- Signed Sale and Purchase Agreement: Legally binding contract with all terms and conditions
- Financing Confirmation: Bank commitment letter demonstrating approved financing
- Insurance Arrangements: Property insurance effective from completion date
Step 9: Pre-Completion Preparations
Final Arrangements
- Final Property Inspection: Ensure property condition matches agreement terms
- Completion Statement Review: Verify all financial calculations and adjustments
- Banking Arrangements: Coordinate loan disbursement and payment procedures
- Legal Document Preparation: Ensure all transfer documents are properly prepared
Regulatory Compliance
- Property Tax Registration: Arrange for property tax account setup
- GST Registration: If applicable for business operations
- Relevant Authority Notifications: Inform URA and other agencies as required
Step 10: Completion and Property Transfer
The final step in the process of how to buy commercial property in Singapore will be to agree on a completion date and clear down your remaining debts. You’ll need to pay the seller, as well as any required taxes, stamp duty and legal fees, before the property will be transferred into your name.
Completion Day Activities
- Final Payment: Balance of purchase price through solicitor’s account
- Document Execution: Sign transfer documents and receive property title
- Key Handover: Receive physical possession of the property
- Registration: Submit documents to Singapore Land Authority for official transfer
Post-Completion Considerations
- Property Management: Arrange ongoing maintenance and management services
- Insurance Updates: Ensure comprehensive coverage is in place
- Tax Optimization: Implement strategies for ongoing tax efficiency
- Business Operations: Begin fit-out or tenant arrangements as planned
Conclusion
The exemption from ABSD, higher rental yields, and favorable foreign ownership rules make Singapore’s commercial property market particularly attractive for both local and international investors.
Key Success Factors:
- Thorough Financial Planning: Accurate budgeting including all associated costs
- Professional Team Assembly: Experienced lawyers, agents, and financial advisors
- Comprehensive Due Diligence: Detailed investigation of legal, financial, and physical aspects
- Strategic Financing: Optimize loan terms and tax efficiency
- Market Understanding: Deep knowledge of property types, locations, and trends
Whether you’re a business owner seeking premises for operations or an investor looking to diversify your portfolio, knowing how to buy commercial property in Singapore market provides excellent opportunities for those who approach it with proper preparation and professional support.
The combination of political stability, economic growth, and favorable regulatory environment makes Singapore an ideal location for commercial property investment.
Frequently Asked Questions
1. Can foreigners buy commercial property in Singapore without restrictions?
Yes, foreigners can freely purchase commercial properties in Singapore without the restrictions that apply to residential properties. Foreign buyers enjoy the same privileges as local buyers, meaning there are no income caps, special eligibility criteria, or ABSD charges.
2. What are the typical financing terms for commercial property loans in Singapore?
Commercial property loans in Singapore typically offer Loan-to-Value (LTV) ratios of 80-90% for owner-occupied properties and 60-70% for investment properties. Interest rates range from 2.8% to 3.2% per annum, with loan tenures of 25-30 years.
3. What additional costs should I budget beyond the purchase price?
Beyond the purchase price, budget for Buyer’s Stamp Duty (1-6% based on property value), legal fees ($3,000-15,000), property survey and valuation ($500-2,000), and potentially 8% GST if buying from a GST-registered entity. Commercial properties are also subject to 10% property tax on annual value.
4. How long does the commercial property buying process typically take?
The commercial property buying process in Singapore typically takes 8-16 weeks from initial offer to completion. This includes 2-3 weeks for due diligence after securing the Option to Purchase (OTP), 2-4 weeks for financing approval, and 8-12 weeks from option exercise to completion.
5. What types of due diligence should I conduct before purchasing commercial property?
Comprehensive due diligence should include legal verification of property title and ownership history, review of existing tenancy agreements and obligations, and confirmation of planning permissions and zoning compliance.
