Singapore’s Strata Subdivision Ban To Increase Land, Property Prices
SINGAPORE – The ban on the strata subdivision of commercial properties in the city-state’s Central Area is expected to boost the land and property values in Singapore’s central business district (CBD) corridor, Historic Zone and the Orchard Road shopping belt, according to an article written by Jones Lang LaSalle (JLL) that was published on The Edge on Friday morning (25 March, SGT).
“Buildings with fragmented ownership face maintenance issues and redevelopment challenges. When existing deteriorating strata subdivided commercial assets are gradually redeveloped, the designated districts can look forward to an uplift in image,” explained Tay Huey Ying, Head of research & consultancy at JLL Singapore.
“Under a single owner, the future developments are likely to be professionally managed and more regularly updated to stay relevant. This will enhance the value of both the property and the land in these designated zones. It will in turn serve as a guarantee of quality for these prime districts.”
Tay revealed that blue-chip tenants often find attractive prime commercial projects that have corporate landlords rather than strata-titled developments with different individual owners. These occupants want to take up space in buildings that have a higher standard of maintenance, and better tenant mix. As such, these major tenants are willing to pay premium rents for quality commercial buildings.
With all else being equal, a single-owned, professionally managed commercial property will command a higher rent than its strata-titled counterparts. In addition, these single-owned buildings often have higher occupancies than strata-titled projects due to concerted and well-coordinated tenant mix curation and marketing efforts.
“Coupled with blue-chip tenants being better pay masters, these factors culminate in prime single-owned commercial assets enjoying a higher and more regular stream of rental income compared to strata-titled assets, thus supporting higher asset and land values,” she concluded.
Furthermore, Tay revealed that such restrictions are not new, as they have been included in different permutations as part of the sales conditions for a number of Government Land Sales (GLS) sites. These included Paya Lebar Quarter, Guoco Midtown, and the upcoming IOI Central Boulevard Towers.
The ban on the strata subdivision of commercial properties in the city-state’s Central Area took effect from 15 March 2022.