Singapore Strata Office Space

Chance To Buy Singapore Strata Office Space Shrinking

SINGAPORE – Opportunities for individuals to acquire strata office spaces in the central business district (CBD) and Orchard Road area appears to be shrinking, according to an opinion piece published by The Business Times on Monday afternoon (11 December, SGT)

For example, workspaces in buildings like the Golden Mile Complex along Beach Road, Shenton House in Shenton Way, and Far East Shopping Centre on Orchard Road were previously owned by multiple strata owners, but these commercial properties have been bought via collective sales.

Also, the Urban Redevelopment Authority (URA) banned strata subdividing of the commercial component of developments located in certain prime areas from March 2022.

The prohibition applies to buildings in Scotts Road, Tanglin Road, Orchard Road, Anson Road, Shenton Way, Robinson Road, and in Raffles Quay facing Raffles Place Park and along the Singapore River. The ban also applies to developments close to key or nationally important landmarks.

Despite the expected shortage, there are demand-side and supply-side factors that favour ownership of strata office space by multiple owners in Singapore’s real estate landscape over the coming years.

For example, many companies want to own their own workspace. Businesses that own their office premises can invest on renovations and upgrades without fear that the costs would go to waste, as compared to a leased office space wherein the owner may not renew the lease. Companies that own its strata office space can also lease out excess workspace, or hold a property whose value appreciates over time.

Tax-wise, for both local and foreign property investors, acquiring non-residential property is usually a smarter move than purchasing houses due to the hefty Additional Buyer’s Stamp Duty (ABSD) of 20 to 30 percent for locals buying multiple houses and a whooping ABSD rate of 60 percent for foreigners acquiring any home in Singapore.

The non-owner-occupier property tax rates for houses will also increase to between 12 and 36 percent of the property’s annual value in 2024 from between 11 and 27 percent previously. Comparatively, such tax for non-residential properties is merely 10 percent of the annual value.

On the supply-side, builders can increase their cash flow by selling strata office space when their development is completed. Furthermore, divesting some strata office units could be easier than finding a minority joint-venture partner.

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