Singapore Strata Office Sales Recover To Pre-pandemic Levels

SINGAPORE – Knight Frank revealed that the city-state’s strata office market registered stable activity during the second half of 2021, with 165 units changing hands during the said period, reported The Edge on Monday afternoon (7 February, SGT).

This pushed the overall tally for last year to 334, marking a 56.8 percent jump versus the 213 recorded in 2020.

“Sales volume largely recovered to pre-pandemic levels in 2021, similar to the 331 in 2018 and 308 in 2019,” noted Mary Sai, Executive Director for capital markets at Knight Frank Singapore.

She disclosed that all strata office sales last were resale deals. Of these, 119 or 35.6 percent of the transactions consisted of freehold office space, with overall sales value hitting S$315.9 million, representing a 60.2 percent year-on-year growth. In terms of per sq ft, freehold strata office units averaged about S$2,430, up 3.3 percent annually.

Meanwhile, deals involving leasehold strata office units totalled 215 in 2021, with total sales value reaching S$838.3 million, marking a 104 percent year-on-year surge. But on psf terms, prices dipped by 0.2 percent year-on-year to S$2,223 in 2021.

Last year, overall sales volume hit S$1.2 billion, the highest since 2014 and nearly a 90 percent increase versus 2020. “While average unit prices for 2021 remained largely similar at $2,276 psf (0.4 percent year-on-year increase), larger quantum sales materialised,” said Sai.

In particular, District 1’s strata office market performed well as it accounted for about 33 percent of the total sales last year and more than double the figure it saw in 2020. Overall deal volume for the district also spiked by 141.7 percent year-on-year to S$731.2 million in 2021.

Sai pointed out that 69.5 percent of the strata offices that changed hands last year were under 1,000 sq ft, which could be due to owner-occupiers rightsizing their office requirements.

For this year, she forecasted that demand for strata office units will increase from family offices and private wealth, in addition to small- and mid-size enterprises (SMEs) looking to rightsize their office space needs.

Coupled with the lack of new strata office stock in the medium term and some spillover investor interest from the private residential market because of the recent cooling measures, Sai thinks that both investor and owner-occupier demand in the strata office market could hit roughly S$1 billion in 2022.