Comercial vs Residential

[richwang]

I am trying to compile something regarding Commercial Property investment.
But there is no way I can do what MCM has done for MM.
So I have decided to let the experts here to brain storm.

Thanks,
Richard

[richwang]

To start with, Commercials are for Business.
So what will be the future booming business sectors in Singapore?

[richwang]

http://www.commercialguru.com.sg/resources/guide/8-considerations-before-buying-commercial-space

Types of Commercial Property
Tenure
Location
Rental Income
GST
Property Tax
Mortgage Loans
Additional Costs

[DKSG]

From a holistic view, with the obscene influx of foreigners into Singapore in the last many years, the demand for residential units is easy to comprehend as every foreigner needs a place to stay.

What is less obvious is the demand for amenities, services, food, etc, ie commercial spaces. Just imagine this, if last time we got population of 3.5 million, and a certain percentage flock to Orchard Road every weekend, resulting in say 800K people in Orchard spending their hearts out. What happen when that population figure increased to 5.x mil ? DId we have another 40% more of Orchard road ? Nope, it is the SAME Orchard.

So whats the knock on effect on rental, it goes up, and then what happens ? Yield become so attractive, commercial prices goes up.

The links in betw, I leave it to our smart forumers to link up ok ?

This is just the beginning, in my view there is room for commercial prices to go up, at least more room than resi now.

Just my 1.5 cents worth of opinion.

DKSG

[richwang]

I am told that you need to know your counterparty when doing a transaction.
For residential property, as a owner, you normally have more information than your tenets. So you are likely to make a rental yield gain.

For commercial property, your counterparty is business people. Are you sure you have a competitive advantage?

I sense majority of retail residential investors may not comfortably convert into commercial investors.

Let's see whether we can learn faster as a group.

Thanks,
Richard

[DKSG]

I am told that you need to know your counterparty when doing a transaction.
For residential property, as a owner, you normally have more information than your tenets. So you are likely to make a rental yield gain.

For commercial property, your counterparty is business people. Are you sure you have a competitive advantage?

I sense majority of retail residential investors may not comfortably convert into commercial investors.

Let's see whether we can learn faster as a group.

Thanks,
Richard

Agree. For commercial, knowing your tenant well is more important than resi. But for resi, tenant's turnover is ALWAYS higher, you are bound to have more untenanted periods than a commercial.

If you are lucky like some Lucky Plaza landlords, they rent out their units to the same tenants for past decades, paying rent dutifully!

You wouldnt be able to get that from a resi tenant.

DKSG

[House]

Residential Rental
1) furnishing the unit every 2 years (paint, locks, white goods.etc)
2) aircon maintenance (depends on terms)
3) leasing period - usually 1-2 years
4) dispute on damaged property; torn up parquet, missing curtains, holes in the wall.etc Landlord is usually on the losing side as some nasty tenants just didnt want to pay the last 1-2 mths of rental.

Commercial/Ind Rental
1) zero furnishing, tenant takes empty unit and do all the reno. Make good when lease ends.
2) aircon maintenance by tenant
3) leasing period - some could be "forever" as tenant has already dump in $$$ for reno, business address.etc
4) dispute on damaged property - what damage can there be for a unit that has only 4 walls?

[richwang]

Food
Clothing
Clinics

But how does the zoning works?

Thanks,
Richard

[richwang]

What is your bet for the up coming commercial area?
I tend to bet on Paya Lebar - apart from the name needs to be changed.

Thanks,
Richard

[masterkey]

What is your bet for the up coming commercial area?
I tend to bet on Paya Lebar - apart from the name needs to be changed.

Thanks,
Richard

What about JLD?
A bigger catchment area, got water (seems important these days), a bohemian concept for the Village, and already close to existing business park.

[peterng8]

what are the chances of enbloc of commercial buildings TILL now ?

[masterkey]

what are the chances of enbloc of commercial buildings TILL now ?
That reminds of the Shenton House enbloc. What is going on, anyone?

It's going to be THE eyesore along that road once UIC completes its makeover.

[gn108]

Commercial bldg are very difficult to EB - for sure.
Coz of the many different sizes, layouts and floors - each got it's own valuation.

But that said, if there is leftover GFA, the building is old/sick/run-down and in a decent location, there is always a chance.


what are the chances of enbloc of commercial buildings TILL now ?

[richwang]

I thought commercial is mainly for the rental yield?
The lease can be as short as 30 years.
Can be high risk if aiming for capital gain. (Of course it can be a bonus).

Thanks,
Richard

[richwang]

If you need to quickly park your money, try Fraser Comm REIT (vested).

And then wait for Bayfront Ventures to develop Commercials targetted at retails.

MM Commerical if you like.

Thanks,
Richard
PS. I like the name Bayfront, it gives u the high class feel.

[richwang]

http://www.fraserscommercialtrust.com/pdf/KeyPoint%20office%20and%20retail%20leasing%20opportunities%20March%202009.pdf

Fraser Comm Bought at $370M for 311,892 sqft. That is $1186 psf.
BayFront bought at $360M. That is $1154 psf.
(So Fraser's $72M gain is accounting - depreciations included).

Now if BayFront re-partition it and sell at S$2000 psf. The size for the units can be 400 sqft - 900 sqft.
The quantum will be S$800K - S$1.6M.
For commercail, you can make 70% loan. So still "affordable".

Thanks,
Richard
PS. Good business for Fragrance. No wonder the boss is the newly minted billionaire in Singapore.

[ikan bilis]

bubble tea... :cheers1:

~~~~~~~~~~~~~~~


http://www.ura.gov.sg/pr/text/2012/pr12-44.html

http://www.ura.gov.sg/pr/graphics/2012/pr12-44a6.pdf

"Prices of multiple-user factory space increased by 7.2% in 1st Quarter 2012, compared with 3.8% in the previous quarter (see Annex A-1 (http://www.ura.gov.sg/pr/graphics/2012/pr12-44a1.pdf)). Rentals of multiple-user factory space increased by 1.3% in 1st Quarter 2012, compared with the increase of 0.6% in the previous quarter (see Annex A-3 (http://www.ura.gov.sg/pr/graphics/2012/pr12-44a3.pdf))."

[richwang]

Residential Index now stands at 206 while factory index is "only" 155.
Anywhere I can find the price for the factories near Joo Koon MRT station?
If you take a walk in those area, you can see the business will be hard to survive (likely to move to Iskandar).
And if there is a re-zone for those area to become office, double your money is a easy task.

Thanks,
Richard

[richwang]

http://www.stproperty.sg/commercial-for-sale/industrial-for-sale/factory---workshop-b2-for-sale/-joo-koon/366315

7.5M for 38000 sqft
197 psf

Shall we pool some money and form a Private Limited Company?

Thanks,
Richard

[richwang]

http://www.commercialguru.com.sg/listing/9389681/for-sale-14-joo-koon-circle

The rental in that area is about S$1.7 psf /month.

So gross rental yield:

S$1.7 x 12 / 197 = 10%

Too good to believe. Of course the lease is only 24-40 years.

Thanks,
Richard

[richwang]

http://www.stproperty.sg/commercial-property-for-sale/industrial-for-sale/factory-workshop-b2-for-sale

Anyone knows what does B2 mean?

Thanks,
Richard

[richwang]

I am trying to register a holding company to pool the money.
Any suggestions for the Company Name?

Thanks,
Richard

[richwang]

http://www.commercialguru.com.sg/resources/guide/commercial-property-taxes

A building will only be exempted from property tax if it is exclusively used for purposes promoting the social development of Singapore, charity, as a public school and a public place of worship,

Maybe we could open up some schools. The re-training of Singapore labor force using Government sponsored money could be a good business.

Thanks,
Richard

[sh]

http://www.stproperty.sg/commercial-property-for-sale/industrial-for-sale/factory-workshop-b2-for-sale

Anyone knows what does B2 mean?

Thanks,
Richard

http://www.ura.gov.sg/circulars/text/dcdnrhb_d0e4.htm

Look under industrial, land use. B1 or B2 divided according to impact on surroundings:)

[richwang]

Let's say you invest S$100. After 24-40 years the principle becomes 0.
Use straight line depreciation. Each year, the deprecation cost would be:

S$100 / 24 = S$4
S$100 / 40 = S$2.5

In other words, your rental yield will be 2.5% - 4% less.

So a nominal 10% gross rental yield will become

6%-7.5%

Still better than Residential.

Of course, factories are really illiquid.

Thanks,
Richard

[richwang]

Thanks for the link. Very useful for a beginner like myself. So B2 should be cheaper?

Business 2 (B2)1
These are areas used or intended to be used for industry, warehouse, utilities and telecommunication uses, whereby the business uses will imposed nuisance buffer more than 50m and within health and safety buffers. Special industries such as manufacture of industrial machinery, shipbuilding and repairing, may be allowed in selected areas subject to evaluation by the Competent Authority.

Thanks,
Richard

[richwang]

http://www.guidemesingapore.com/incorporation/company/singapore-company-registration-guide

I remember you need S$100K to register a Pte Ltd.
But it seems you just need S$1 now.
The share holders cannot be more than 50.
If we are talking about getting S$10M, that is S$200K each.
If we can get 70% bank loan, we just need S$60K cash.

So cheap?

Thanks,
Richard

[richwang]

http://www.guidemesingapore.com/faqs/new-company-registration-faqs

While you could register a company with S$1, but it seems S$50K is what the government would expect. If we divide it by 50 (the max share holders allowed), that is S$1k per share. still feasible.

Thanks,
Richard

[richwang]

http://www.guidemesingapore.com/industry-guides/real-estate/singapore-real-estate-company-setup-guide

Real Estate Agency Setup: Key Facts and Requirements
A company that is involved in the business of buying, selling and leasing of properties must obtain a ‘House Agent’s License’ from the Inland Revenue Authority of Singapore.
Only companies, partnerships or sole-proprietorships (not individuals) are required to apply for the House Agent’s License.
You must first incorporate a Singapore company or register the Limited Liability Partnership or sole-proprietorship with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) before applying for the House Agent’s License. For details on how to setup a Singapore company please refer to Singapore company formation (http://www.guidemesingapore.com/incorporation/company/singapore-company-registration-guide) guide.
The applicant who is the main licensee must:
Be a Singapore citizen or Singapore Permanent Resident;
Possess a graduate degree in real estate from the National University of Singapore; or must be an advocate / solicitor who holds a practising certificate;
Have passed the Common Examinations for House Agents (CEHA) or Association of Singapore Realtors’ Course or Singapore Institute of Surveyors and Valuers’ Real Estate Agency Course;
Possess at least one year of working experience under a licensed real estate agency;
Have concluded at least 20 property transactions in the last two years for a licensed real estate agency. At least five out of the 20 transactions must involve a sale or one-year lease of private properties. The 20 transactions should either be direct cases or a combination of 15 direct cases and 10 co-broke cases (each co-broke case is considered as half a case). The net commission received for each transaction concluded should at least be S$1,000.
Have more than 50% shareholding in the proposed real estate agency.=============
So I cannot register the new company as real estate agency.

I need to register it under some "real" industrial activities.
3D Printing is the first thing coming into my mind.



Thanks,
Richard

[richwang]

OOPS. "3D Printing Pte Ltd" is already registered.
Any other suggestions? This forum is very creative!

Thanks,
Richard

[richwang]

"3D RAPID Ptd Ltd" is still available.
Any objections or better suggestions?

Thanks,
Richard

[august]

3G sounds nicer and high tech :o

[richwang]

http://www.businessinsider.com/3d-printing-2011-2?op=1

"3G" as a company name is already in use. And it is limited to Telecomms.
"3D printing" is the next generation clean manufacturing. See the link above.

Thanks,
Richard

[carbuncle]

DiDaDi Printing Pte Ltd. Still 3 D.... Added benefit of client sure remember you... Also sounds like the sound made when printing...

[focus]

Registering a company to buy properties now is not worthwhile.
I thought 10% ABSD is applicable now for companies buying properties (residential or commercial).

[dtrax]

Registering a company to buy properties now is not worthwhile.
I thought 10% ABSD is applicable now for companies buying properties (residential or commercial).

commercial no absd

[dtrax]

197 psf still on the higher side:

N.A. 15 Joo Koon Road 3634 Land 6,500,000 1789 166 13-MAR-2012 Factory (All Types) 30 Yrs From 01/09/1986 Resale 27 76 628976 West Region Pioneer

N.A. 8 Joo Koon Road 4920 Land 6,560,000 1333 124 05-MAR-2012 Factory (All Types) 999 Yrs From 18/11/1969 Resale 22 62 628972 West Region Pioneer

N.A. 4 Joo Koon Road 4920 Land 6,550,000 1331 124 24-FEB-2012 Factory (All Types) 30 Yrs From 02/10/1984 Resale 22 62 628968 West Region Pioneer

[richwang]

Thanks for the information. So we still have plenty of choices.
For the SSIC Code, which one should I use?

http://app-stg.acra.gov.sg/ssicsearch.asp

68204 COMMERCIAL AND INDUSTRIAL REAL ESTATE MANAGEMENT
maybe under very strict regulation requirements?

46541 WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT
cannot do retail business in future?

82999 OTHER BUSINESS SUPPORT SERVICES ACTIVITIES NEC
What is NEC?

Thanks,
Richard

[maisonjai]

OOPS. "3D Printing Pte Ltd" is already registered.
Any other suggestions? This forum is very creative!
Thanks,
Richard
no 3D then use 4D, sure huat. :cheers1:

[richwang]

*Like!*
Amazing, it is still available as Company Name.

Thanks,
Richard

[richwang]

Home office can only engage up to two persons who are not residents for their Home Office business.
So the alternative is to use some "corporate service". The charges will be S$500 per year. It's reasonable.

http://www.guidemesingapore.com/services/our-fees

Any cheaper and better solutions?

Thanks,
Richard