Strata commercial market achieves record-highs in 2021

Amongst records set was the $1.2b total sales value in the strata office market.

The strata commercial market capped off 2021 with a bang, achieving record-highs last year, data from Knight Frank Singapore showed.

Amongst records set in 2021 was the $1.2b total sales in the strata office market, which represents a 90% year-on-year (YoY) surge from 2020, and also the highest transacted value ever recorded since 2014.

Breaking the total sales value into the first and second half of 2021, the strata office market grossed total sales of $450.8m and $703.5m, respectively.

Apart from transaction value, the sales volume of strata offices likewise increased in 2021, increasing by 56.8% YoY to 334, which is above pre-pandemic levels of 331 in 2018 and 308 in 2019. About 35.6% of the total transaction volume in 2021 was freehold.

Notable transactions recorded in 2021 include the sale of Samsung Hub’s ninth floor for $53.1m and the podium of GB building for $25.5m which was sold to Dia-Globe Singapore.

With 280 units changing hands in 2021, sales value for the strata retail market hit $496.5m, which is the highest sales value recorded since the last peak in 2017.

“Factors driving this possibly included the blossoming of new enterprises and local brands establishing a foothold in the retail market, as retailers take up smaller footprints to kick-off new ventures. Additionally, the increasingly-gentrified and higher occupational costs of shophouses might have propelled some retailers to move out and consider more affordable strata retail space options when current prices are at a bargain,” Mary Sai, executive director, Capital Markets, Knight Frank Singapore, said.

Notable transactions in the strata retail market include the sale of units at Sultan Plaza for $25.3m and New World Centre for $17.3m in July and the sale of ten cloud kitchen units at CT Hub 2 from July to September 2021 for a total of about S$7.4m.

For 2022, Knight Frank’s outlook for both the strata office and retail markets are optimistic.

“Demand for strata office units is expected to grow from private wealth and family offices, and Small-and-Medium Enterprises (SMEs) looking to right-size office space requirements in the technologically enhanced post-pandemic era. Given these factors, the lack of new strata office supply in the medium term and some spillover investor interest from the private residential market as a result of the cooling measures announced on 15 December 2021, both investor and owner-occupier demand that might flow into the strata office market in 2022 could translate to an amount of about S$1.0 billion,” Sai said.

On the retail market, Sai said: “Many strata retail owners are currently not in a hurry to sell their units unless reasonable offers are made. And as interest in such units picks up due to the current affordability, the strata retail market is projected to report moderate recovery likely in the second half of 2022 where the total sales value for the whole year is forecasted to hover around $500m.”