Selling commercial property in Singapore: GST, buyers and process

Commercial is a different market

Commercial property - office units, retail space, and the like - is bought by businesses and investors rather than home-buyers. That changes the buyer pool, the financing, the tax treatment, and how the property is valued. If your experience is in selling a home, expect the commercial process to feel different.

GST on the sale

This is the big difference from selling a home. The sale of commercial property can attract Goods and Services Tax, depending on whether the seller is GST-registered. GST does not apply to residential property sales in the same way, so it is easy to overlook. Because the treatment depends on your GST registration status and the specifics of the deal, confirm the GST position for your sale with IRAS before you price and market the property.

Stamp duties differ by property type

Residential, commercial and industrial property each have their own stamp duty rules. The Additional Buyer's Stamp Duty that weighs on residential purchases does not apply to commercial property in the same way, and the duties on selling differ too. Do not assume the residential rules carry over - confirm the stamp duty position for commercial property, for both the sale and the buyer, with IRAS.

The buyer pool and financing

Your buyers are businesses looking for premises and investors looking for yield. They finance on commercial terms, which differ from home loans - typically with different loan-to-value limits and assessment. A buyer's financing taking longer, or being structured differently, is normal in a commercial sale.

Valuation

Commercial property is often valued with an eye on the income it can produce - the rent it commands, the quality of any tenant, the lease in place - as well as comparable transactions. A tenanted commercial unit with a solid lease is a different proposition from a vacant one.

The process

The transaction still runs through an Option to Purchase and completion via the lawyers, but the due diligence is heavier: zoning and permitted use, the lease and tenant if any, the GST position, the building's condition. Allow time for it.

The honest summary

Selling commercial property differs from selling a home in several ways at once - GST can apply to the sale, the stamp duty rules are different, the buyers are businesses and investors financing on commercial terms, and valuation often turns on income. Confirm the GST and stamp duty position with IRAS, and work with a conveyancing lawyer and an agent experienced in commercial transactions.