Strata offices prices fall 20.1% h-o-h in 1H2024: Knight Frank

Suntec City saw some of the largest strata office deals by quantum in 1H2024. (Photo: Samuel Isaac Chua / EdgeProp Singapore)

The average price of strata office spaces dropped 20.1% h-o-h to $2,190 psf in 1H2024 from $2,740 psf in 2H2023, according to a report published by Knight Frank.

In terms of transaction volume, the strata office market has held relatively stable at 154 transactions in 1H2024, just two deals fewer than the 156 transactions seen in 2H2023. However, the fall in psf-prices has led to a 15.6% h-o-h decline in total transaction value — falling to $437.3 million in 1H2024 from $518 million in 2H2023.

The top five biggest transactions by absolute price over the first six months of the year consisted mainly of units sold at Vision Exchange and Suntec City.

Vision Exchange took the top two spots with the sale of a 14,015 sq ft unit and another 10,775 sq ft unit for $33.3 million ($2,378 psf) and $25.7 million ($2,381 psf) respectively. Both deals were struck in February.

Similarly, Suntec City took the next two spots on the list with the sale of a 4,833 sq ft office unit on the 36th floor and a 4,779 sq ft unit on the 22nd floor — both in Tower Three. The unit on the 36th floor was sold for about $16 million ($3,311 psf), making it the third-highest strata office transaction in the first six months of the year. The sale was followed by the unit on the 22nd floor, which was sold for $15.3 million ($3,200 psf).

Rounding out the top five is the sale of a 2,325 sq ft unit on the ninth floor of Connexion, a mixed-use development along Farrer Park Station Road. The unit was sold for $11.6 million ($5,000 psf) in May, the highest recorded transaction for the development in terms of absolute price.

According to Knight Frank, the Downtown Core Planning Area attracted the most buyers in 1H2024, accounting for 47 transactions with a combined value of $190.1 million.

The area was supported by the sale of units in International Plaza and Solitaire on Cecil, which is the only new freehold strata office building within the CBD. Knight Frank believes it is likely that more strata office transactions were made in 1H2024 but not accounted for as no caveats were lodged.

The fall in strata office prices in 1H2024 was driven by declines in prices across both freehold and leasehold assets. Nonetheless, Knight Frank’s data shows that the average price of freehold units had a slower rate of decline compared to leasehold units.

Recent transactions on Solitaire On Cecil. (Source: URA, EP Buddy)

The average price of freehold strata office spaces in 1H2024 dipped to $2,804 psf, a 13.3% h-o-h decline from $3,235 psf in 2H2023. Meanwhile, the average price of leasehold strata units registered a steeper drop of 17.1% to $2,031 psf in 1H2024 from $2,448 in 2H2023.

Freehold office units also saw an uptick in transaction volume, growing to 49 deals in 1H2024 from 42 deals done in 2H2023. However, the total sales value fell to $115.4 million in 1H2024, a 49% drop from $226.3 million in 2H2023.

The inverse was observed in the leasehold segment. The total sales value of leasehold strata office units increased 10.4% to $321.9 million in 1H2024 from $291.7 million in 2H2023, despite a fall in the number of units sold. There were 105 leasehold strata office deals in 1H2024, a 7.9% h-o-h slip compared to 114 in 2H2023.

Knight Frank notes that strata office transaction volume has remained stable over the past 12 to 18 months despite an overall lack of new inventory.

In any case, it anticipates transactions in the coming months to be supported by 108 Robinson Road and VisionCrest Orchard. Strata units at the two freehold office buildings, located at Robinson Road and Penang Road, have been launched for sale since March and July, respectively.

Knight Frank projects that the strata office market could achieve a total sales value of $1 billion for the whole of 2024.