Strata Office Units At 20 Cecil Street Sold For S$3,090 Psf
SINGAPORE – Property agents revealed that 11 strata-titled office units at 20 Cecil Street have changed hands since mid-October. With asking prices ranging from S$2,950 psf, these were transacted at an average of S$3,090 psf, or a total of S$43.1 million, reported The Edge on Friday morning (29 January, SGT).
The buyers consist of Singaporeans and high-net-worth entrepreneurs from Hong Kong, China, South Korea, Vietnam, and Indonesia, some of whom bought multiple units, shared Navin Bafna, Associate Branch Director at PropNex, which jointly marketed the office units with Savills Singapore.
The office units sold range from 570 sq ft to more than 1,000 sq ft, with some acquired as a bundle of two or more, said Savills Singapore’s Director of capital markets & investment sales Yap Hui Yee. Moreover, 40 percent of the buyers were business-occupiers, while 60 percent were acquiring for investment reasons.
Based on 20 Cecil Street’s latest transacted monthly rental rate of S$9.60 psf and the unit’s asking prices, Yap estimates that the buyers will be able to attain gross rental yields of between 3.8 percent and 4.2 percent. “This is more attractive than residential yields today,” she noted.
Situated strategically at the intersection of Church Street and Cecil Street, the 28-storey office tower has a 99-year leasehold tenure with effect from 1989. While it was completed in 1992 by Keppel Land, it was acquired by a private fund overseen by CapitaLand for more than S$500 million (S$2,320 psf) in 2019.
Last October, 27 strata office units on level 4, 5, 9 and 17 at the property were launched for sale at an indicative price of $100 million, or $3,143 psf based on their combined strata area.
But Savills’ Yap pointed out that there are only 56 strata office units up for grabs in the Grade A office tower as CapitaLand’s private fund plans to keep the other whole floor office units for lease.
PropNex’s Bafna also noted that such strata office units are a rarity. “There’s hardly any Grade-A quality office building with strata units for sale within Raffles Place.”
Yap concurs. Based on Savills’ data, merely 13 percent of the overall CBD office supply consists of strata-titled developments. “The limited supply has been crimped further by a strata-subdivision restriction on commercial Government Land Sale (GLS) sites in recent years. Interest has been especially keen in the prime Districts 1 and 2 CBD areas.”
Specifically, strata-titled offices measuring from 500 sq ft to 1,000 sq ft are the most in-demand as their price of under S$1 million to S$2.5 million are palatable to most investors. Moreover, such small units are rarely available, particularly in Grade-A office towers in the CBD Core, said Yap.
In addition, the Central Region’s strata-titled office stock hovered at 10.5 million sq ft as of the third quarter of 2020. And this was just 0.36 percent higher than the 20-year average from 2000 to 2020.
“The strata-titled office market proved to be an attractive asset class, especially for projects located in prime Districts 1 and 2 which constituted 64.8 percent of the total transacted volume in 2020,” noted Yap.
Furthermore, Savills’ data showed while the sector’s capital values edged up by only 2.6 percent on an annual basis to S$2,606 psf in 2020, it recorded a 12.3 percent growth from 2018 to 2019.