Strata office market records $365.1 mil sales in 1H2022, investors eye en bloc potential
By Timothy Tay
/ EdgeProp Singapore |
There was a slowdown in strata office sales activity in 1H2022 due to to the shrinking stock of saleable strata office units in the market, says Knight Frank.
SINGAPORE (EDGEPROP) - The first half of 2022 saw 145 strata office units changing hands, amounting to a total transaction value of $365.1 million, according to a market report by Knight Frank.
In contrast, 2H2021 recorded 172 units sold, amounting to $461.9 million, which translates to a half-yearly decline of 15.7%. However, on a yearly basis, the amount transacted in 1H2022 was slightly more than half of the $703.5 million registered from the sale of 169 units in 1H2021.
Knight Frank attributes the slowdown in sales activity in 1H2022 to the shrinking stock of saleable strata office units in the market. “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,” says Mary Sai, executive director of capital markets at Knight Frank Singapore. (Find Singapore commercial properties with our commercial directory)
Big-ticket transactions in the commercial sector in 1H2022 include the sales of Westgate Tower for $677.5 million and Twenty Anson for $600 million. The most expensive strata office transaction in 1H2022 was the sale of an entire 11,744 sq ft office floor at Suntec City Tower 2 for $38.8 million ($3,300 psf) in June.
The largest volume of strata office transactions in 1H2022 came from the Downtown Core Planning Area, which saw 45 units sold. According to Sai, most of these transactions involved strata offices in older office buildings that possess en bloc potential or have been launched for collective sale, she says. (See potential condos with en bloc calculator)
For example, High Street Centre and Shenton House saw a combined total of nine units being transacted. High Street Centre launched its collective sale tender in May last year, while Shenton House tried to launch a collective sale bid in 2017.
Investor interest in the strata retail market also seems to be picking up, says Knight Frank The consultancy notes that since the start of 2021, transactions for strata retail units have progressively increased and the momentum is likely to continue this year.
In 1H2022, 126 units were sold, amounting to $290.9 million in sales value. Investors continued to focus on the Rochor, Downtown Core, and Orchard Road Planning Areas.
A snapshot of strata retail transactions in the Downtown Core, Rochor, and Orchard Road planning areas, compiled by EdgeProp's Market Trend analytics tool. (Chart: URA/ EdgeProp)
“As business sentiments improved with reinvigorated buzz in the retail scene from the end of March this year, the increase in activity could potentially translate into more strata retail sales by investors as well as retail operators in the coming months,” says Sai.
The new strata subdivision rule that kicked in during March will limit the supply of these strata retail units and subsequently attract more investors into the market, she says. The new rule prohibits the development of strata commercial properties in certain prominent locations of the Central Area.
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