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Singapore cooling: Commercial property offers some opportunities

By Cheryl Tay: Although the latest round of cooling measures focuses mainly on residential property, the rules affecting industrial property which were introduced for the first time last week have no doubt stirred investors.

To discourage short-term speculative activity which can distort prices and raise business costs, the new measures include a Seller's Stamp Duty (SSD) on industrial properties and land sold within three years of the date of purchase: 15 percent within the first year and 10 percent and five percent within the second and third year respectively.

Experts who spoke to PropertyGuru said the regulations will have some impact.   

Colin Tan of Chesterton Suntec International is confident that "these new measures will be effective in reducing short-term purchases, especially those looking to earn a quick profit".

He also said that strong demand for long-term investments and from owner-occupiers will ensure continued buying activity and that "it is a little difficult to see prices trending downwards anytime soon".

Roy Chong, Head of Business Space at PropNex feels the same way, but added: "Since it only covers up to three years from the date of purchase, it may not affect some mid-term investors who buy new properties that reach TOP in two years. They will be subject to only five percent SSD if they sell in the third year."

Rising land costs means prices will remain high, though they may see slower growth now. While that may discourage speculative activity, industrial property still has the lowest quantum among the different property types. Chong said: "Investors looking for property below S$1 million will go for such property, as the rental yield is the highest. Volumes may slide in the next three to five months, but prices will not."

Another concern is that the measures will drive more investors and therefore, speculative activity to the retail and office markets. Though still unaffected by cooling measures, Chong believes the latest rules will act as a catalyst to significantly boost activity in these sectors.

Tan said: "Investors will look to other segments like strata offices and strata retail space or shops. We have been very slow in reacting to the speculative activity in this sector. There has been much damage and the negative consequences show up much later." Cheryl Tay, Editor of CommericalGuru, wrote this story. To contact her about this or other stories, email Related Stories: 30% spike in new private home sales

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