Singapore commercial property gross rental yields typically run 3.5-6.5% — meaningfully above residential (2.5-3.5%). Strata office and retail in CBD periphery (Tanjong Pagar, Bugis) yield 4-5.5%; industrial B1/B2 strata 5-6.5%; F&B-zoned shophouses 3.5-4.5% (capital appreciation offsets lower yield). Yield premium reflects shorter leases (3-yr typical), tenant credit risk, and lower liquidity vs residential.
Commercial yield in Singapore consistently runs 100-300bps above residential, primarily because the buyer pool is narrower (no foreign retail, no first-time-buyer subsidy), tenant credit risk is higher (business failures vs employed individual tenants), and lease tenor is shorter (3-year typical vs 2-year residential).
Within commercial, strata-titled assets (individual office floors, individual shop units in retail malls, individual industrial units in flatted factories) are the accessible segment for retail investors. Whole-building commercial is institutional territory.
Three structural rules:
Lease tenor and renewal patterns — Office leases typically 3+3 (3-year initial, 3-year renewal option); retail 3-6 years; F&B 2-3 years. Shorter tenor = higher tenant turnover = higher re-let costs.
GST recoverable for B2B tenants — Commercial rent is GST-taxable (9% currently). Most business tenants are GST-registered and recover the GST via input credits, so the effective net rent matches the headline.
Loan LTV cap is lower — Commercial property loans typically max 80% LTV (some banks 70%); older industrial often capped at 60%. Cash-on-cash returns require this leverage consideration.
Landed and commercial property in Singapore are specialist sub-markets governed by different regulations, tax schedules, and financing rules than mainstream condos. Both carry meaningfully different risk-return profiles — landed rewards multi-decade patience with land scarcity, commercial rewards active tenant management with higher gross yields. This guide covers the regulatory framework, cost base, and market data relevant to the topic so you can judge whether the opportunity fits your capital and operational capacity.
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Commercial vs Residential Yields
Commercial properties in Singapore generally offer higher gross yields than residential, but with different risk profiles and cost structures.
Key Differences
- No ABSD — commercial property is exempt from ABSD
- Shorter leases — industrial properties often have 30-60 year leases
- GST — commercial property transactions may attract GST
- Different loan terms — typically higher rates, lower LTV for commercial
Indicative gross yield by commercial segment (Apr 2026):
| Segment | Gross Yield Range | Typical Entry Price | Lease Tenor |
|---|---|---|---|
| CBD core office (strata, prime Grade A) | 3.5-4.5% | S$3-5M+ per unit | 3+3 years |
| CBD periphery strata office | 4-5.5% | S$1-2M per unit | 3+3 years |
| Suburban retail strata (mall units) | 4-5% | S$1.5-3M | 3-6 years |
| F&B shophouses (conservation) | 3.5-4.5% | S$5-15M+ | 2-3 years |
| Industrial B1/B2 strata (Tampines, Loyang, Bukit Batok) | 5-6.5% | S$0.8-2M | 2-3 years |
Industrial leads on yield because of shorter tenor, narrower tenant pool, and stricter use restrictions (B1: light industry, B2: special industry). Capital appreciation typically modest vs office/retail.
Sources & methodology. Aggregates from URA REALIS transaction caveats (commercial transactions) and IRAS commercial rental indices.
- Stress-test on tenant credit. Verify your tenant's business viability, ACRA filings, and credit history before signing the lease. Tenant default is the dominant risk in commercial.
- Factor 2-4 month re-let vacancy. Commercial relets take longer than residential; budget 3-month vacancy in your yield model.
- Confirm permitted use before purchase. URA permitted-use codes restrict tenant pool; F&B in non-F&B-zoned space requires Change of Use approval (expensive, sometimes denied).
- Verify GST status of the asset. If purchase price includes GST and you are not GST-registered, the 9% is a permanent cost; consider GST registration if rental is the primary business activity.
Methodology & Sources
This analysis covers full-year 2026 data and refreshes one-time.
Transaction data sourced from URA REALIS.
Median values used to minimise outlier impact. PSF = price per square foot.
Frequently Asked Questions
How do financing rules differ from condos?
Is landed or commercial a better inflation hedge?
What ongoing costs should I budget for?
Why do industrial yields beat office yields?
Industrial yields are higher because of stricter use restrictions (B1/B2 zoning), narrower tenant pool, shorter lease tenor, and lower capital appreciation expectations. Office stocks attract more institutional capital, compressing yields.
Are conservation shophouses worth the lower yield?
For investors prioritising capital appreciation and brand value, yes — conservation shophouses in Tanjong Pagar, Boat Quay, Telok Ayer have delivered 6-10% annual capital appreciation over the past decade. For income-focused investors, industrial strata wins.
What is the typical down-payment for commercial property?
Banks typically require 20-40% down (LTV 60-80%). For older industrial or restricted-use stock, down-payment can be 40-50%. Confirm with your specific bank before OTP.