Singapore Strata Office Sales Plunge, Prices Rise as Supply Dries Up

Singapore’s strata office sales amounted to S$365.1 million ($265 million) in the first half of 2022, marking a 15.7 percent decline from the prior six months and a 48.1 percent plunge on year-earlier levels, according to Knight Frank.

A total of 145 strata office units changed hands in the first half of this year, down from 172 sold in the second half of 2021 and 169 a year earlier. On a unit area basis, however, first-half strata office deals averaged S$2,319 per square foot, up from S$2,116 during 2021’s second half.

The slowdown in sales activity could be due to the shrinking saleable stock of strata offices in the city-state, Knight Frank said in its Singapore Strata Commercial Market Update.

“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,” the property services firm said.

Suntec Shines

Singapore’s downtown core enjoyed the largest volume of strata office sales in the January-June period, shifting 45 units. Most of the transactions occurred in older buildings that have en-bloc potential or have been launched for a collective sale, including High Street Centre at Boat Quay and Shenton House near Marina Bay, which recorded a combined nine transactions, Knight Frank said.

In central Singapore, Suntec City continued to see healthy sales, trading on its mix of a strong location and an ample supply of well-maintained, strata-titled units.

An office occupying an entire floor of 11,744 square feet (1,091 square metres) in Suntec Tower 2 sold for S$38.8 million (S$3,300 per square foot) in June, reportedly to a permanent resident of Chinese descent who appreciated the unblocked view of Marina Bay. At the same development in April, a 4,069 square foot unit sold for S$13.3 million (S$3,280 per square foot) in Suntec Tower 1.

The first half’s biggest transaction on a unit area basis was the January sale of a 3,875 square foot strata office in Samsung Hub at 3 Church Street near Raffles Place, where the S$16.1 million sale price pencilled out to $4,155 per square foot.

Demand for leasehold strata offices continued to outpace freehold. Of the 145 strata office caveats lodged in the first half, 97 transactions were leasehold, said Knight Frank, which forecast strata office transactions in the whole of 2022 to reach S$600 million-S$700 million.

Retail Rebound Detected

In the strata retail market, a smaller number of deals still translated to a half-yearly gain in total sales value.

The first half of 2022 saw 126 retail units change hands for S$290.9 million, compared with 137 units for S$267.4 million in the preceding six months. The removal of limits on gathering size and operating hours sparked renewed interest in strata retail space that was largely overlooked during the onset of the COVID-19 pandemic, Knight Frank said.

The biggest retail transaction by sale price was the S$68.7 million paid for 55,370 square feet of strata area at The Woodgrove mall in northern Singapore’s Woodlands, while the richest deal on a unit area basis was S$4,160 per square foot for 6,491 square feet at Coronation Shopping Plaza in Bukit Timah.

Knight Frank views strata retail units as a potentially attractive asset class for investors looking to ride on the tide of returning shoppers, diners and tourists.

“Singapore’s commitment to opening borders and normalising business and social activities to pre-pandemic levels will increase the level of interest for strata commercial space, both office and retail, in the remaining half of 2022,” said Mary Sai, executive director for investment and capital markets at Knight Frank Singapore.