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The number of caveats lodged for strata-titled office spaces plummeted by 72.7 percent to 81 cases in the first five months of 2015 compared to 297 in the corresponding period last year, according to a Knight Frank report.
Citing data from the URA’s Real Estate Information System (REALIS) as of 11 June 2015, the consultancy said this represents the lowest level since the 63 caveats recorded in 1H 2009.
In particular, the number of caveats submitted for the sale of new freehold strata office units rose to seven from merely three in 2H 2014, with average prices climbing by 17.8 percent to S$3,467 per sq ft relative to the said period.
“All new sale freehold caveats lodged were contributed by the new office development, Crown at Robinson, located in Tanjong Pagar within the Central Business District (CBD),” Knight Frank said.
Moreover, average prices of new leasehold office units rose to S$2,646 per sq ft in the period under review from S$2,257 per sq ft in the second half of 2015 as a result of continued interest in Vision Exchange and the launch of new strata office projects like GSH Plaza.
Over at the strata retail segment, 84 caveats were filed between January and May 2015 versus 202 in the same period a year ago
Although there were no newly launched retail projects during the period, average prices of new sale freehold strata retail units surged to $3,919 per sq ft from $3,525 per sq ft largely because of two large deals at Novena Regency valued at S$6,473 per sq ft.
Prices of resale leasehold strata retail units also improved marginally to S$2,418 per sq ft from S$2,234 per sq ft previously, but average prices of new leasehold strata retail units slid to S$$3,723 per sq ft from S$4,035 per sq ft in 2H 2015.
Looking ahead, overall transaction volume is expected to remain subdued at about 400 to 600 units for the entire year as Singapore’s strata-titled commercial property market is still held back by the government’s cooling measures, especially the Total Debt Servicing Ratio (TDSR) framework. Another factor is the moderating demand for commercial space in recent months due to slowing business activities.
Nevertheless, smaller-sized office units in the core financial district are forecasted to remain sought-after due to their limited supply. Prices of strata-titled offices could also hover at sustainable levels, with limited downside at least for the next two to three months.
However, further price growth for strata offices in the latter half of 2015 could be restrained by the likelihood that office rents could soften in light of economic uncertainties.
Meanwhile, retail rents could face downward pressure this year. The demand for strata-titled retail units is also unlikely to rise noticeably this year amid the existing challenges confronting retailers.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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