Singapore's strata office market gains momentum

THE strata office market seems to be rousing in the last half a year. While the sales volume and pricing are still lower than the pre-TDSR period of 2013, activity seems to have steadily returned since 2015. At the peak of its cycle in 2012, property sales of strata-titled offices were at an all-time high with a record S$2.29 billion worth of new and resale strata offices traded - almost three times more than the sale transactions of S$760 million in 2017.

The market then was dominated by a 70-30 ratio of investors to end-users at that point in the cycle. Ready credit enticed many investors to purchase a slice of the office strata investment market. Developers, egged on by the frenzy, used the opportunity to convert whole commercial floors into strata units, parcelled out for sale to investors.

Post-TDSR, coupled with the surmounting pressure on rents and supply looming, investors began to shy away from the office strata market. With credit conditions tightened, the ratio of investors to end-users shifted to the converse, with end-users now making up 70 per cent of the buyers and investors the remaining 30 per cent.