Singapore Strata Office Sales Fell In H1
SINGAPORE – Strata office sales in the city-state declined by number and overall value during the first half of the year, according to a report published by Knight Frank on Tuesday morning (2 August, SGT).
In H1 2022, 145 strata office units were sold in Singapore for a total of S$365.1 million. This is down 15.7 percent and 21 percent respectively from the 172 units that changed hands to the tune of S$461.9 million in H2 2021.
Compared to the same period a year ago, when 169 strata office units were purchased for a total of S$703.5 million, deal number and overall value fell by 14.2 percent and 48.1 percent respectively.
“The slowdown in sales activity could be attributed to the shrinking saleable stock of strata offices. With the recent successful collective sale of a few strata commercial buildings, existing owners of other strata buildings may be holding on to their units in hopes of also embarking on the en bloc route,” explained property consultancy Knight Frank.
“As such, investors with a view towards capital gains might also tap into the market for the en bloc potential of strata offices.”
Notably, the Downtown Core Planning Area saw the highest volume of sales during the period under review. Most of the deal there comprised strata office units in older office buildings that hold en bloc potential or have been launched for a collective sale. For instance, Shenton House and High Street Centre registered a total of nine transactions and this indicates ongoing interest among investors for this asset class.
Other notable strata office transactions in H1 2022 included Paya Lebar Square, where nine units were sold. Similar to Suntec City, the development’s close proximity to various amenities such as retail facilities and an MRT station played a key role in luring buyers. Apart from its good location, strata office units within this building are also priced more affordably compared to other units, especially the ones in Singapore’s Central Business District (CBD).
Moreover, Knight Frank noted that demand for leasehold strata office units continued to surpass its freehold counterparts. Of the 145 strata office caveats lodged in H1 2022, 97 deals comprised leasehold units. Nonetheless, this was fewer than the 116 units taken up in H2 2021. Likewise, 48 freehold strata offices exchanged hands in H1, down from the 56 units recorded in the last six months of 2021.
“Even though the volume of leasehold units narrowed in H1, the gross total of S$248.4 million brought the average unit price to S$2,243 psf which represented an 8.4 percent increase on a half-yearly basis. The same was observed for freehold transactions. The average unit price of S$2,500 psf, led by a total transacted amount of S$116.7 million, was an 11.0 percent increase from H2 2021,” it said.
Looking forward, Knight Frank expects overall sales of Singapore strata office units could range between S$600 million S$700 million for the whole of 2022, amidst the zero immediate supply of upcoming strata offices.