The number of property investors switching to commercial properties is expected to increase, after the government’s latest measures to cool the residential property market, according to some bankers.
They believe that interest in commercial property has been rising for several months, driven by higher yields and low interest rates, against costly residential properties.
One property agent noted that the yield for commercial property can be as high as seven percent, compared to two to three percent for residential property.
“Both corporate and retail customers have expressed interest in investing in the commercial property market over the past few months,” said a spokesperson from United Overseas Bank.
A DBS Bank spokeswoman, on the other hand, revealed that from an investment viewpoint, there is still liquidity in the market.
“Following the large rise in prices in the residential property market, some investors have switched from that segment to the commercial and industrial property market,” she added.
In addition, sellers of commercial property are stepping up their marketing to bank on the greater interest.
“For business owners, more are keen to own their own commercial property, given that there are now smaller units being built, which are more affordable to the businessmen,” said Raghu A, Head of Commercial Banking at Maybank Singapore.
“Coupled with rising commercial rentals, more businesses may then prefer to own their own commercial properties.”
However, one banker warned that the buoyant commercial property market may not last, with the current global slowdown.
“Overall, we are seeing a moderation in loan growth as businesses are adopting a cautious outlook amid the global economic uncertainties,” said Samuel Tsien, Head of Global Corporate Bank at OCBC Bank.
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