Yields vs residential
Commercial and industrial units typically offer higher gross rental yields than residential property, often by a meaningful margin. That premium exists for real reasons, not as a free lunch: longer potential vacancy periods between tenants, a smaller pool of buyers when you eventually sell (which affects liquidity), and tenant businesses that can fail or downsize in a way an individual residential tenant's job loss usually doesn't scale to.
Actual yields vary widely by property type, location and tenant profile — treat any specific number you see quoted as a starting point for due diligence, not a guarantee.
REITs vs direct ownership
| REITs | Direct Ownership | |
|---|---|---|
| Entry capital | As low as one share price | Full unit price, minus financing |
| Liquidity | Tradable on SGX, sell any trading day | Illiquid — a sale can take months |
| Management | Professionally managed for you | You handle (or hire out) leasing, maintenance, tenant issues |
| Control & upside | None — you own units, not the asset | Full control over leasing strategy, refinancing, timing of sale |
| Leverage | Built into the REIT's own gearing, not yours directly | Your own bank financing, typically up to 80% LTV |
Neither is objectively better — REITs suit passive income with liquidity; direct ownership suits investors who want control and are comfortable with illiquidity and active management.
GST recovery for direct owners
If you buy a commercial or industrial unit from a GST-registered seller, the 9% GST on the purchase price is real cash out the door upfront. If you (or your purchasing entity) register for GST, you may be able to recover that input tax over time — which materially changes your day-one cash yield calculation compared to a buyer who can't recover it.
Which situation fits you?
- Want exposure without the operational work: a REIT gives you commercial/industrial exposure with liquidity and no landlord duties.
- Want control and are comfortable with illiquidity: direct ownership lets you set leasing strategy and capture the full upside, at the cost of active management.
- Buying from a developer or GST-registered seller: check whether GST registration and recovery makes sense for your structure before finalising your cash flow projections.
Tenure — freehold vs 99-year leasehold — also factors into long-term capital appreciation here, the same way it does for residential. That's covered separately; happy to walk you through it when we talk.
Get your investment analysis
Tell me a little about what you're considering and I'll help work through the real yield, GST treatment and financing for your situation.