How to Value Strata-Title Commercial Property in Singapore (2026)

How we made this. Updated for 2026 with AI-assisted research. Figures are linked to their sources — check them before you act.

To value a strata-titled shop or office, work out the rent it can really earn, subtract every cost the owner carries to get net operating income, and then convert that income into a value. You can do that with a single capitalisation rate or with a ten-year cash flow model. Then compare the answer with recent sales and the asking price. This guide shows the method with a worked example and the Singapore costs that catch buyers out.

At a glance

Residential buyers pay ABSD. Commercial buyers do not, which is why they move across during cooling rounds. But commercial units carry 10% property tax with no owner-occupier discount, possible GST and a 5% bank stress-test rate.
Value three ways: recent comparable sales, income capitalisation (net income ÷ cap rate) and a discounted cash flow. Use all three.
In our example, a S$1.2m office earns a 3.8% net yield. A ten-year cash flow model values it at about S$1.12m at a 6% discount rate. That is less than the S$1.24m all-in cost.
The exit cap rate matters most. Moving it from 3% to 5% changes the value by about S$403,000.

What has changed since the original guide

An earlier version of this article used a 2013 case, when interest rates were low and the new TDSR framework applied a 4.5% medium-term rate to commercial loans. MAS has since raised the floor to 5% for non-residential property loans, and the old projects and prices are out of date. The method has not changed, so this version uses a new, labelled example.

The rules and costs that sit outside the rent roll

Item	What applies in 2026
Buyer’s Stamp Duty	1% / 2% / 3% / 4% / 5% tiers; the top rate is 5% for non-residential property (6% above S$3m applies to residential only)
ABSD	Does not apply to non-residential property
Property tax	10% of annual value. Owner-occupier rates do not apply, even if you use the unit yourself. Vacant units are taxed too
GST	The sale and lease of non-residential property are subject to GST (currently 9%) when the supplier is GST-registered. A GST-registered buyer can generally claim it as input tax, subject to IRAS’s conditions; ask your lawyer whether it applies to your deal
Seller’s Stamp Duty	IRAS publishes SSD rules for residential and industrial property. For shophouses and other mixed-use property, SSD can apply to the part used as a home
Financing	The TDSR interest rate floor is 5% for non-residential loans. Banks set their own loan-to-value and pricing, so ask each one
Management corporation charges	Maintenance and sinking-fund contributions follow your unit’s share value under the Building (Strata Management) Act. Ask for the latest accounts

The rent also earns you income tax at your marginal rate, which is not in the net operating income below.

Three ways to value it

1. Comparable sales. Compare the price per square foot with recent sales in the same building and similar ones nearby. Adjust for floor, frontage, condition, the lease on the unit and the remaining land lease. This tells you what others have paid, not what the unit earns.

2. Income capitalisation. Value = net operating income (NOI) ÷ capitalisation rate. A buyer who needs a 4% return on NOI will pay S$1,132,500 for a unit that earns S$45,300. This is quick, but it needs a believable cap rate, and it hides assumptions about growth and vacancy.

3. Discounted cash flow (DCF). List the net income for each year of your planned holding period, add the expected sale price at the end, and discount everything at the return you require. This is slower but shows you the assumptions. Our guide to NPV and MIRR explains the maths.

Certified valuations are also a data point, but valuers tend to follow the market rather than lead it. Do not treat one as a verdict.

Worked example: a 600 sq ft strata office

This is a hypothetical unit. We assumed every number, so replace them with real quotes before you rely on the answer.

Price: S$1,200,000 (S$2,000 per sq ft).
Rent: S$9.00 per sq ft a month, or S$5,400 a month (S$64,800 a year).
The seller is not GST-registered.

Yearly item	Amount	Assumption
Gross rent	S$64,800	S$9.00 × 600 sq ft × 12
Vacancy and downtime	−S$5,400	One month a year
Property tax	−S$6,480	10% of an annual value equal to the rent
Management charges	−S$4,320	S$0.60 per sq ft a month
Leasing commission	−S$1,800	One month’s rent per three-year lease
Repairs	−S$1,500
Net operating income	S$45,300

The gross yield is 5.4%, and the net yield is 3.8% (S$45,300 ÷ S$1.2m). The all-in cost is higher: BSD of S$32,600 plus S$3,000 of legal fees (assumed) gives S$1,235,600, and the net yield on that is 3.7%.

Now the DCF. We assume NOI grows 2% a year, you hold for ten years, and you sell at a 4% exit cap rate on year-11 income, less 2% selling costs. We discount at 6%. This is a reasonable hurdle if risk-free money earns about 2.5% in CPF and a leased commercial unit carries tenant, vacancy and liquidity risk.

Sale price in year 10: about S$1,380,500, or S$1,352,900 after costs.
Present value of all income and the sale: S$1,117,083.
Against the cost of S$1,235,600, the NPV is about −S$118,500.
The internal rate of return is 4.75%.

At these assumptions the unit is worth about S$1.12m to a buyer who needs 6%. The asking price of S$1.2m is too high. To earn 6% you would negotiate the price down, find a higher rent or accept a lower return.

What drives the answer

The table shows the present value of the income and sale at different exit cap rates and discount rates. The all-in cost is S$1,235,600.

Exit cap rate	5% discount	6% discount	7% discount
3%	S$1,487,400	S$1,368,900	S$1,261,569
4%	S$1,210,545	S$1,117,083	S$1,032,321
5%	S$1,044,432	S$965,992	S$894,771

Most of the value is the sale price in year 10, so the exit cap rate matters more than rent growth. If the unit’s rent does not grow at all, the NPV falls from −S$118,500 to −S$282,500 at the 4% exit cap rate. A buyer who assumes a 3% exit cap rate is assuming that the market will pay more for a ten-year-older unit than it pays today. That is an optimistic assumption. Use a higher exit cap rate than the entry rate, and test the whole range.

The lender’s view

A bank cares about whether the rent covers the loan. Say you borrow S$600,000, half the price (an assumption: banks set their own limits). At the 5% stress rate, interest is S$30,000 a year, and NOI of S$45,300 covers it 1.5 times. If the unit sits empty for three months, NOI drops to S$29,100 and the cover falls to 0.97 times. You would have to pay part of the interest from your own pocket. This is the same stress test that you should apply, whatever the bank asks for.

The market you are valuing in

URA’s second-quarter 2026 statistics show where the commercial market stood. Office prices rose 0.4% and rents 0.8%, but the island-wide office vacancy rate was 11.0%. Retail prices rose 0.8% and rents 0.6%, with retail vacancy at 6.5%. Vacancy at those levels gives tenants bargaining power, so a rent-free period, a fit-out contribution or a longer void are all realistic. Model them. Industrial and shophouse units behave differently, so do not use office or retail numbers for them.

Due diligence checklist

The current lease: tenant, expiry, rent reviews, rent-free periods and who pays the property tax and charges.
The management corporation’s accounts, sinking fund balance and any approved major works. A large special levy cuts your return.
The remaining land lease. A shorter lease means the price must fall over time. See our guide to valuing leasehold property.
Permitted use under the unit’s planning approval.
Whether GST applies, and how it affects your cash needs.
Your loan terms at the 5% stress rate, and a cash reserve for a long void.

For a listed alternative that holds commercial property, see REITs versus physical property.

Bottom line

Value a strata commercial unit from its income, not from the agent’s yield table. Build the net operating income line by line, run a cash flow with a cautious exit cap rate, and compare the result with recent sales. Then check that you can service the loan at 5% through a long vacancy. If the price only works at an optimistic exit, it does not work.

Sources

Measures to promote sustainable conditions in the property market by ensuring prudent borrowing and moderating demand — MAS, 29 Sep 2022
Buyer’s Stamp Duty (BSD) — IRAS, rates effective 15 Feb 2023 (checked Oct 2026)
Property tax rates — IRAS (checked Oct 2026)
GST: real estate — IRAS (checked Oct 2026)
Current GST rates — IRAS (checked Oct 2026)
Seller’s Stamp Duty (SSD) for residential property and for industrial property — IRAS (checked Oct 2026)
Building (Strata Management) Act 2004 (called the Building Maintenance and Strata Management Act until 1 Oct 2025) — Singapore Statutes Online
Release of 2nd Quarter 2026 real estate statistics — URA, 24 Jul 2026
CPF interest rates — CPF Board (checked Oct 2026)