Strata retail sales down 32.1% in H1 to S$215.5 million; strata office deals take a dip
Knight Frank says both types of units offer opportunities for end-users and non-institutional retail investors because they can be owner-occupied or leased out
THE total transacted value of strata retail units fell 32.1 per cent to S$215.5 million in the first half of the year, from S$317.2 million in the corresponding period a year ago, real estate consultant Knight Frank said on Monday (Aug 12).
The first half of the year brought 131 strata retail transactions – a 10.9 per cent half-yearly fall in transaction volumes from 147 in H2 2023.
The majority of these transactions were smaller ones of under S$4 million.
Only three of these strata retail units were sold at above S$10 million. The largest sale among them, at Royal Square at Novena, fetched S$11 million. A freehold strata retail unit at Peninsula Plaza was sold for S$10.4 million in April.
Seventy-six freehold strata units changed hands for about S$119.9 million, reflecting an average price of S$3,266 per square foot (psf).
Fifty-five leasehold strata retail units were transacted for S$95.6 million in the first half of the year. Their average price fell 21.1 per cent to S$2,411 psf in H1 2024, from S$3,054 psf in H2 2023.
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Knight Frank noted that the operating environment for the retail and food and beverage sector remained challenging, as rising costs weighed on growth.
Strata retail units offer buyers business space opportunities at more manageable investment quantums, and are a cheaper investment alternative to conservation shophouses.
The real estate consultancy added that this comes even as the retail sector has returned to a post-pandemic normal. Interest levels in strata retail units located away from transport nodes and which lack healthy foot traffic are likely to remain muted.
Executive director of capital markets at Knight Frank Singapore Mary Sai said: “With the more affordable price points of this type of property being within reach of retail investors, a projected total sales value of between S$400 million and S$500 million can be expected for the whole of 2024.”
On the other hand, sales of strata office units fell to S$437.3 million in the first half of the year, from S$518 million in H2 2023, with 154 transactions – 49 were freehold properties, and 105, leasehold ones.
Additionally, the average price for strata office units fell to S$2,190 psf, from S$2,740 psf in H2 2023.
Units at Vision Exchange (an office asset in Jurong) and Suntec City accounted for the majority of the top five transactions in the first half of the year.
The sales of two units on level 21 of Vision Exchange topped the list at S$33.3 million and S$25.7 million. Both were sold in February. Two units at Suntec City fetched prices of S$16 million and S$15.3 million.
Knight Frank said the Downtown Core planning area continued to account for the highest number of strata office transactions and total sales value in H1 2024.
A total of 47 strata office transactions were recorded, with a total sales value of S$190.1 million. Strata office units at International Plaza and Solitaire on Cecil accounted for many of the units exchanged in the area.
Transaction volume in Singapore’s strata office market has remained stable over the past 12 to 18 months, the real estate consultancy added, despite a limited supply of this niche real estate type.
Knight Frank expects a total transaction value of S$1 billion for the whole year in the strata office market, amid firm demand for this real estate type in the country.
“The strata office market could probably chalk up a total transaction value of S$1 billion for the whole of 2024,” Sai noted.
“With limited new stock, both strata office and retail units offer opportunities for end-users as well as non-institutional retail investors, with the flexibility to adjust between space for owner occupation or to lease out for recurring income,” she added.
“There could also be the possibility of a collective sale sometime down the road for older commercial buildings.”
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