Article

Key Contemplations to Make When Investing On Commercial Properties

Written by Maryann Wilson

Topic: Real EstatePublished October 28, 2015

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Foreign investors in the city-state of Singapore are making a gradual shift towards commercial projects due to the recent enactment of the ABSD or Additional Buyer's Stamp Duty. Due to the implementation of this duty, the commercial property market of the city has become less rigid and stringent for investors. The long-term consequences of this implementation, however, on the market for residential homes are yet to be seen. Hopefully, the near future would provide the answers to the questions in regards to the long-term consequences.

There are a number of considerations that every commercial property investor must consider before they decide to make an investment on one such property in the city. Investments on commercial properties do promise to offer better returns than residential property investments. There are, however, a number of factors and critical aspects that determine the ROI or returns on investment. Some of these factors include new and future developments in the surrounding area, re-zoning, infrastructure, etc. It is important to consider and contemplate these factors before making an investment on a commercial project.

This could reduce the chances of suffering losses significantly. Some of these critical factors have been discussed here.

Future Developments: New developments in the near or distant future can have a significant impact on the way the market behaves. Developments like residential homes and condos, along with better transportation facilities can increase the flow of people to the property, and cause the price of the property to increase substantially. On the other hand, developments like another commercial complex or other constructions and developments that block the flow of traffic to the property could have severe negative impacts on the profitability of the property.

Location: TThe location of the commercial property is an important consideration to make. It is best to invest on a commercial property like the Tai Seng Point in a location that is easily accessible through various means of transport. This will enable people from various parts of the city to access the property with ease, and in turn, increase the profitability of any business carried out in the property. This will cause the value of the property to appreciate substantially.

Mortgages and Loans: Commercial properties in the city like the Tai Seng Point Singapore come with very expensive price tags. Hence, it is practically impossible to finance an investment without taking loans unless there are billions in the bank. Bank loans can be very handy in such situations as they provide up to 80% of the price. The payback periods are also considerably easy as they usually range from 15 to 20 years. Hence, it is important to first decide upon a budget and then invest on the finest property within that budget.

Rental Yield: One of the best ways to derive profits from a commercial property if not utilizing it is by renting it out. A commercial property in a good location and with considerably less completion will always attract a higher rental yield. Once again, the location of the property is an important consideration when investing on a commercial property.

An investment made after careful contemplation will certainly provide great benefits and profitability. Hence, a commercial property investment must be carefully contemplated and carried out.

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About the Author

Maryann Wilson has been associated with the commercial property market of Singapore for over a decade and has worked with several properties like the Tai Seng Point. She now works as a consultant for foreign investors, helping them with commercial properties like the Tai Seng Point Singapore.

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