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Singapore’s strata commercial market is headed for “one of its most challenging years in recent time”, as overall sale transaction volume are expected to remain tepid this year, according to Knight Frank.
This comes as high vacancies in several recently-completed strata commercial developments are keeping discerning buyers on the sidelines.
“With the slower economic outlook, projected demand for strata office and retail units could slow further in 1H 2016.”
Notably, the number of caveats lodged for strata-titled office spaces fell 10.8 percent to 107 in 2H 2015 from 120 in 1H 2015. While total strata office transaction value rose 32.3 percent, average prices of strata office dipped by six percent to S$2,376 per sq ft in 2H 2015 from S$2,528 per sq ft in 1H 2015.
Knight Frank’s report revealed that the number of Singaporeans acquiring strata-titled offices jumped to 31.8 percent, while the number of company and foreign buyers dropped 24.1 percent and 30.8 percent respectively.
The property consultancy also noted growing interest for strata office units below S$1 million during H2 2015. In fact, the proportion of offices transacted below the S$1 million price tag increased to 26.2 percent, while strata office transactions above S$2 million price tag dropped to 27.1 percent. Those transacted between S$1 million and S$2 million accounted for the biggest proportion at 46.7 percent.
Over at the retail front, total caveats for strata retail units fell 17.4 percent to 100 in 2H 2015 from 121 in 1H 2015.
The proportion of strata retail units transacted above S$1 million price tag shrunk to 66 percent in 2H 2015 from 71.1 percent in 1H 2015.
“As potential investors continue to be on the lookout for strata retail spaces, they are also observed to be mindful of the overall price quantum,” said Knight Frank.
As such, the retail landscape is “expected to face threats of tighter labour policies, shrinking demand for physical retail spaces amid the rise of e-commerce presence and an anticipated slower global economy in 2016.”
But unlike strata office and strata retail units, shophouses witnessed sustained interest throughout 2015, with a total of 44 caveats lodged in 2H 2015 from 41 in 1H 2015.
Total transaction value, however, slipped 9.5 percent to S$282 million during the period.
Knight Frank said even with the stricter Total Debt Servicing Ratio (TDSR) framework dampening island-wide property demand and prices, shophouses acquired post-TDSR and sold in 2H 2015 managed to see reasonable capital gains.
“Looking at stable transaction volume and performance in 2015 despite the slow property scene, the demand for shophouses is likely to be stable during 1H 2016, with total transaction volume of between 40 and 50 units,” it said.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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