Healthy Demand For Singapore Strata Office Units In Q4 2022
SINGAPORE – Real estate investors’ appetite for strata office space remained strong in the 4th quarter, and demand for this asset class did not appear to slow down during the period, according to a new report published by Knight Frank on Wednesday afternoon (11 January, SGT).
In fact, there were several notable strata office transactions in Q4 2022. Last October, luxury watch seller Cortina Holdings purchased the 4th floor at the 15 Scotts office building for S$49 million. Last November, two high floors at Springleaf Tower were picked up by Esteel Enterprise for around S$53.9 million, which works out to S$2,510 psf.
“Given the more palatable size and quantum, investments in the strata office market are expected to continue in the coming months,” forecasted Knight Frank.
Meanwhile, the real estate consultancy revealed that overall property investment in Singapore across all asset types for the whole of 2022 reached S$31.9 billion, up 20.4 percent from the S$26.5 billion recorded during the preceding year.
However, the stream of deals slowed down in the October to December period, with transaction volume declining by 22 percent quarter-on-quarter to S$4.5 billion.
Still, 2022’s biggest property investment deal was inked during the remaining days of December. It was Hong Kong-listed Link REIT’s acquisition of 2 shopping centres – Jurong Point and Swing By @ Thomson Plaza – for a total of S$2.16 billion
“Other asset classes – particularly office and hospitality – continued to generate interest, owing to the possibility of positive carry,” noted Knight Frank.
“Nevertheless, with increasing interest rates, institutional funds are more likely to adopt a watch-and-wait approach. This leaves the door open for private capital, who are not as reliant on debt-financing, to become more active in commercial real estate investments in the months ahead, with Singapore continuing to represent a destination of stability amid the rocky global climate.”
Summing up, the property consultancy described 2022 as a roller coaster ride. The year started with euphoria arising from the reopening of borders and economies across the world during the 1st half of the year, before business optimism tempered in the latter half as fears over an economic downturn returned amidst heightened inflation, higher interest rates, and Russia’s invasion of Ukraine.
In this climate, commercial property transactions accounted for a huge chunk of the overall property investment deals in Singapore throughout 2022, followed by residential, Knight Frank added.