As a result of rising rental costs and a strong economy, more SMEs are buying office, warehouse, and factory spaces, according to OCBC Bank, which has seen mortgage loan applications triple over the last six months.
Buying commercial space could be a means of saving money on rental costs, which are slated to rise by 15 to 18% this year, says analysts that TODAY spoke to (also see story on rising rental costs for high-tech industrial spaces). They also say this trend will continue since entrepreneurs are recognizing that buying rather than renting has cost savings.
Says Alfred Chia, chief executive officer of financial advisory firm SingCapital: “The first point of consideration is, based on the rental I am paying now, can I better make use of these resources if I’m to own a space? For example, if I buy a space and my instalment can be cheaper than my rental, then I would say that is a very good point of consideration. And any capital appreciation should come as a kind of secondary consideration.”
Photo: Chris Lawrence
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