Buyers Starved Of New Strata Office Units In Singapore
SINGAPORE – Knight Frank said that the robust sale at Solitaire on Cecil meant that investors and buyers were “starved of new strata office units,” reported The Edge on Wednesday afternoon (2 August, SGT).
According to a research note published by the property consultancy on Wednesday, Solitaire on Cecil accounted for the largest strata office deals during the first six months of the year. However, the total transaction volume of strata office properties in Singapore declined during the period as compared to H2 2022.
In H1 2023, there were a total of 149 strata office deals collectively worth S$652.9 million, down 19.8 percent from the 160 strata office transactions in the prior 6-month period that were sold for S$814.1 million in all.
“Amid the geopolitical tensions, economic uncertainties and increasing interest rates, demand for strata offices eased,” noted Knight Frank Singapore’s Executive Director for capital markets Mary Sai.
Nonetheless, the release of new strata office supply from Solitaire on Cecil had a huge impact on the market and drove sales activity, demonstrating pent-up demand, she said. “The introduction of new bite-sized freehold office assets of investment quality in a CBD location had been absent from the market for several years.”
The full extent of market demand for new strata office units in Singapore’s CBD is still understated as some of the buyers of office space at Solitaire on Cecil were not reported or did not file caveats, as some preferred to keep a low profile, Sai explained.
Moreover, the brisk sales of strata office units at Solitaire on Cecil also pushed up the average unit price of freehold strata offices in Singapore by about 20 percent to S$3,746 psf during the first half of the year.
“This was due to Solitaire on Cecil selling out all units with a total sales value of S$321.8 million at an average price of S$4,239 psf based on the caveats that were lodged,” she explained.
But given that there are no more new strata office stock for the rest of 2023, deal activity for this asset class is forecasted to ease. Still, the market is expected to record overall transaction value ranging from S$1.1 billion to S$1.2 billion thanks to the spillover demand from residential property investors affected by the April 2023 property cooling measures and the amendment to the Residential Property Act in July, added Sai.