Buying Commercial Property in Singapore: What to Look Out For (2026)
A 2026 checklist for buying a shop, office or industrial unit in Singapore: 9% GST, 10% property tax, stamp duty, the 5% loan test, vacancy and lease risks.
How we made this. Updated for 2026 with AI-assisted research. Figures are linked to their sources — check them before you act.
Buying a commercial unit is a different deal from buying a home. You pay GST in some cases, 10% property tax, no ABSD, and a loan that banks test at a 5% rate. The rent also depends on a business tenant, not a family. This checklist covers what to check before you commit, with a worked example of the cash flow. For how to put a price on a unit, see our guide to valuing strata-title commercial property.
At a glance
- GST is now 9%, not the 7% in older guides. It can apply when you buy non-residential property from a GST-registered seller.
- Property tax is 10% of annual value, with no owner-occupier discount.
- ABSD is a residential duty, so it does not apply. That is one reason some investors look at commercial units when residential duties are high.
- Banks test non-residential loans at a 5% rate under the TDSR.
- In Q2 2026, URA put island-wide office vacancy at 11.0% and retail vacancy at 6.5%.
What has changed since the original guide
The 2011 version quoted a 7% GST, loans of 70% to 80% over 15 to 20 years, and an investor who covered his mortgage from rent. Those figures are gone. GST was 7% from July 2007 to the end of 2022, then rose to 8% in 2023 and is now 9%, according to IRAS’s GST rate history. Loan terms are set by each bank, and mortgage rates now follow SORA or a fixed rate. Do not rely on any loan percentage you read online; ask lenders for a written offer.
Step 1: Pick the type of property
“Commercial” covers different assets with different risks:
- Strata shops and offices in a mixed or office development. You own one unit and share common areas through a management corporation.
- Shophouses with their own planning and conservation rules.
- Industrial units, which carry Seller’s Stamp Duty if you sell within three years of buying.
Check the permitted use against the unit’s planning approval before you pay a deposit, and ask your lawyer to confirm it.
Step 2: Check the tenure
Commercial properties can be freehold or leasehold, and the remaining lease changes the price. A shorter lease means you have fewer years of rent to earn your money back, and the price must drop over time. Our guide to leasehold property explains how lease decay works.
Step 3: Read the lease and the tenant
Rent that covers the loan is only as good as the tenant who pays it. Ask for:
- the tenant’s name, lease expiry, rent reviews and rent-free periods;
- who pays property tax, repairs and management charges;
- the deposit and any history of late payment.
If the unit is vacant, find out why. A long void can wipe out a year’s net income.
Step 4: Count GST, stamp duty and tax
- GST. IRAS says the sale and lease of non-residential property are subject to GST, while residential sales and leases are exempt. If a GST-registered seller sells you a S$1m unit, GST is S$90,000. An individual cannot claim it back. A GST-registered company may, but check your obligations with IRAS or an accountant first. In the 2011 version, the same S$300,000 unit carried S$21,000 of GST at 7%. It would now be S$27,000.
- Buyer’s Stamp Duty. BSD for non-residential property runs from 1% to 5%. On S$1m it is S$24,600. The 6% rate above S$3m applies to residential property only.
- ABSD. Not charged on non-residential property. Our stamp duty guide lists what applies to homes.
- Property tax. 10% of annual value, as the 2011 version said. That has not changed.
- Other costs. Management and sinking-fund charges, renovation, legal fees and agent fees.
Step 5: Test the loan and the cash flow
Banks apply the TDSR to property loans and use a 5% floor for non-residential property. Your lender sets the loan-to-value, the tenure and the pricing, so ask for written terms.
Here is a hypothetical example. You buy a S$1m office for investment, and the seller is not GST-registered.
| Yearly item | Amount | Assumption |
|---|---|---|
| Gross rent | S$48,000 | S$4,000 a month |
| Vacancy | −S$4,000 | One month a year |
| Property tax | −S$4,800 | 10%, annual value equal to the rent |
| Management charges | −S$3,600 | Assumed |
| Repairs | −S$1,500 | Assumed |
| Net operating income | S$34,100 |
The all-in cost is S$1,027,600: S$1m, BSD of S$24,600 and S$3,000 of assumed legal fees. The gross yield is 4.8%, and the net yield is 3.3%.
Say a bank lends S$500,000. At the 5% stress rate, interest is S$25,000 a year, so net income covers it 1.36 times. Now suppose the tenant leaves and the unit sits empty for three more months. You lose S$12,000 of rent, but property tax and charges continue. Net income falls to S$22,100, and cover drops to 0.88 times. You would pay part of the interest from your own pocket. Use the mortgage calculator to test your own loan.
Step 6: Look at the market
URA’s second-quarter 2026 statistics show a market where tenants have bargaining power:
| Segment | Prices | Rents | Vacancy |
|---|---|---|---|
| Office | +0.4% | +0.8% | 11.0% (10.8% in Q1) |
| Retail | +0.8% | +0.6% | 6.5% (6.3% in Q1) |
The pipeline of office space was about 848,000 sq m of gross floor area and retail about 604,000 sq m. Expect rent-free periods and fit-out contributions in negotiation, and model them.
Who can buy
Foreign buyers can buy commercial and industrial property without approval under the Residential Property Act, according to the Singapore Land Authority. That list also covers a shophouse for commercial use. Check any residential component, as mixed-use buildings follow separate rules.
Alternatives
If you want commercial property income without a single unit’s risk, listed REITs own offices, malls and industrial space and let you buy in small amounts.
Bottom line
A commercial unit can work as an investment, but only if the rent, after GST, tax, costs and voids, still covers the loan at the bank’s 5% test. Check the type, the lease, the tenant and the vacancy in the area. Then stress the cash flow for an empty unit. If it only works with a full unit and a low rate, it is too thin.
Sources
- Current GST rates — IRAS (checked Oct 2026)
- GST: real estate — IRAS (checked Oct 2026)
- Property tax rates — IRAS (checked Oct 2026)
- Buyer’s Stamp Duty (BSD) — IRAS, rates from 15 Feb 2023 (checked Oct 2026)
- Seller’s Stamp Duty (SSD) for industrial property — IRAS (checked Oct 2026)
- Measures to promote sustainable conditions in the property market by ensuring prudent borrowing and moderating demand — MAS, 29 Sep 2022
- MSR and TDSR rules — MAS (checked Oct 2026)
- Release of 2nd Quarter 2026 real estate statistics — URA, 24 Jul 2026
- Foreign ownership of property — Singapore Land Authority, updated 20 Aug 2025
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