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Singapore: Related Information

Commercial Property

The Commercial Property Market

With more than US$3bn of commercial property sales in Q3 2010, Singapore ranked third in the Asia Pacific region after Japan and Australia. Q1 had seen a comparable level of activity, although Q2 was lower.

Altogether, it's clear that the Singapore commercial property market is back to full health after problems in 2008 and 2009. A new business development, the Marina Bay Financial Centre, has helped to boost Singapore's image as a regional business centre.

A CN Richard Ellis report ranked Singapore as 15th in the world for office rentals in 2009, down from 9th in 2008. This may be a major factor in drawing business away from Hong Kong, which is most respects is Singapore's main competitor for regional hub business. Banks and other financial services providers chasing the booming wealth management sector are a particularly thriving area. Hong Kong ranks 4th in the same table. The decision of the Urban Redevelopment Authority to permit mixed-use developments in so-called White Zones is another positive factor for the commercial property market.

There is considerable over-supply of commercial space at present, after completions in 2008 and 2009 failed to find immediate tenants, particularly in the retail sector, where a number of new malls came on the market in 2009.

A study issued by consultancy DTZ in August, 2010, says that Singapore's commercial properties offer highly attractive returns, and the firm expects that rents will show strong growth in the next five years.

 

Commercial Property Prices

Rents and prices fell significantly in 2008 and 2009; by the end of 2009 average office rents were a shade over six Singapore dollars per square foot.

 

Commercial Property Law

The main laws affecting commercial property in Singapore are the Housing Developers (Control and Licensing) Act and the Sale of Commercial Properties Act. Commercial property is defined as a building or part of one intended for use as a complete or separate unit for any purpose other than as a residence.

Many aspects of the format and content of sale contracts are prescribed by the law.

In a property transaction, the appointed lawyer will conduct a set of prescribed searches and supervizes the completion process. Transactions have to be registered with the Singapore Land Authority, and stamp duties are usually payable.

Commission structures for agents are not prescribed by the law; one to three percent is normal.

 

Commercial Property Taxation

Stamp duty is payable on certain executed documents relating to properties and shares, or interest in properties and shares. Such documents include a lease, sale, purchase, gift or mortgage of property. Liability arises once the document is executed, even if the transaction itself has been aborted.

The amount of duty payable varies according to the transaction. For example, in the case of a mortgage, the duty is SGD4 for every SGD1,000 or part thereof, subject to a maximum duty payable of SGD500.

Property tax is charged on immovable property, including a house, building and land. The amount of tax due is calculated based on a percentage (tax rate) of the annual value of a property. The tax rate is 10%, or 4% where the property is granted an owner-occupier concession.

From January 1, 2011, the 4% tax rate will be replaced by a three-tier tax rate based on the annual value, as follows:

Annual value
Tax rate
First SGD6,000
0%
Next SGD59,000
4%
Above SGD65,000
6%

Goods and services tax applies to most sales of commercial property; the buyer has to withhold 15% of the purchase price if the vendor is a registered GST trader.

 

 

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