Strata Offices Prices Fall 201 H O H 1H2024 Knight Frank
According to a recent report published by Knight Frank, the strata office market saw a significant decline in prices in the first half of 2024, with the average price dropping by 20.1% from $2,740 psf in the second half of 2023 to $2,190 psf. Despite this, the market remained relatively stable in terms of transaction volume, with 154 deals in 1H2024 compared to 156 in 2H2023. However, the decrease in prices resulted in a 15.6% decline in total transaction value, falling to $437.3 million in 1H2024 from $518 million in the previous half.
The top five biggest transactions by absolute price in the first six months of the year were mainly from 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 a 10,775 sq ft unit for $33.3 million ($2,378 psf) and $25.7 million ($2,381 psf) respectively. These deals were made in February. Suntec City followed with two transactions, a 4,833 sq ft unit on the 36th floor and a 4,779 sq ft unit on the 22nd floor in Tower Three. The unit on the 36th floor was sold for $16 million ($3,311 psf), making it the third-highest strata office transaction in the first half of the year. The sale was followed by the unit on the 22nd floor, which was sold for $15.3 million ($3,200 psf). The fifth spot went to a 2,325 sq ft unit on the ninth floor of Connexion, a mixed-use development along Farrer Park Station Road, which was sold for $11.6 million ($5,000 psf) in May, the highest recorded transaction for the development in terms of absolute price.
In terms of location, the Downtown Core Planning Area received the most attention from buyers in 1H2024, with 47 transactions totaling $190.1 million. This was largely due to the sale of units in International Plaza and Solitaire on Cecil, the only new freehold strata office building in the CBD. Knight Frank believes that there were more strata office transactions in 1H2024, but not all were recorded as no caveats were lodged.
The decline in strata office prices in 1H2024 was driven by decreases in prices for both freehold and leasehold assets. However, data from Knight Frank shows that freehold units experienced a slower rate of decline compared to leasehold units. The average price of freehold strata office spaces in 1H2024 fell by 13.3% to $2,804 psf, while the average price of leasehold units saw a steeper decline of 17.1% to $2,031 psf.
There was an increase in transaction volume for freehold office units, with 49 deals in 1H2024 compared to 42 in 2H2023. However, the total sales value decreased by 49% to $115.4 million in 1H2024. On the other hand, the total sales value of leasehold strata office units increased by 10.4% to $321.9 million in 1H2024, despite a slight decrease in the number of units sold. There were 105 leasehold strata office deals in 1H2024, compared to 114 in 2H2023.
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Knight Frank notes that although there has been a lack of new inventory, the strata office market has remained relatively stable over the past 12 to 18 months. It expects transactions to be supported by the launch of 108 Robinson Road and VisionCrest Orchard, two freehold office buildings located at Robinson Road and Penang Road, which have been on sale since March and July respectively. Knight Frank projects that the strata office market could reach a total sales value of $1 billion for the whole of 2024.