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Miscellaneous (HDB, EC, commercial and industrial property; general business/economic news) Discussion and news about HDB, EC, commercial and industrial property; business and the economy.

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Old 20th July 2012
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Default Strata commercial properties see record sales

http://www.businesstimes.com.sg/arch...e-record-sales

Published July 19, 2012

Strata commercial properties see record sales

669 strata shops, 632 strata offices transacted in first half: Knight Frank

By wang xin min


[SINGAPORE] Transaction sales of strata commercial properties reached record highs for the first six months of this year and may remain at such levels, according to property consultancy Knight Frank.

It noted in a report that 669 strata shops and 632 strata offices were transacted in the first half of the year, representing an all-time high since 1995. Such strong sales came from the primary market, which accounted for 66 and 72 per cent of all transactions for strata shops and office respectively.

Strata shop sales exceeded the total of 624 transactions for the whole of last year. Singaporeans remained its main contributors, accounting for 66 per cent of all transactions.

Compared to strata shop supply last year, which was dominated by projects in the suburbs, new sales this year were concentrated at the central region. Accordingly, the average unit price in the primary market in the first half of this year was 24 per cent higher than that last year, at $3,273 per square foot (psf), due to higher rates in the central region.

New strata shops with longer tenures and retail-conducive locations also saw strong buying interest as they are viewed as good long-term investments.

Older resale strata shops, with stable rentals but lower prices compared to those at the primary market, also attracted buyers.

Therefore, the average unit price rose 23 per cent in the first half of this year compared to the last, to reach $2,825 psf in the secondary market despite a dip in sale activity.

Over at the strata office market, primary market sales transactions saw a nineteen-fold increase from last year to $814.9 million and a 56 per cent increase in the average unit price to $2,129 psf, due to an increased number of new strata office projects in the central business district (CBD) and the availability of smaller-sized office units with lower price quantums.

However, weakening office rentals and increasing shadow space in the office sector led to a 24 per cent decrease in sales activity in the strata office secondary market and lower average unit prices of $1,706 psf compared to last year. Companies seeking to lock in favourable prices comprise the bulk of buyers (56 per cent) in the office space market.

While transaction volumes of shophouses fell 25 per cent from last year to 132 units, the overall value of total shophouse sales rose 4 per cent to $674.6 million, with unit prices increasing by 34 per cent to $2,804 psf, another record high since 1995. The report noted that the decrease in transaction volume was due to the steep increase in prices. Nonetheless, strata shophouses are viewed as attractive investment assets, with cash-rich investors purchasing multiple units in single transactions.

The report noted that commercial sales are expected to remain fairly active for the rest of the year as alternatives to the residential sector. Transaction activity and prices are thus expected to increase, especially for the strata shop and shophouse segments, with higher yields offered by commercial properties appealing to buyers looking for higher returns. In particular, well-located strata shops and shophouses will remain popular as they offer regular income and are limited in supply.

However, investors are expected to be cautious given the receding rents in the office sector despite increased transaction sales of strata offices in the first half. Nevertheless, the 7.68 million sq ft of new space expected in the next five years will offer opportunities for owner occupiers to transact at favourable rates.

Commercial sales of shophouses, strata shops and offices for the first half of the year amounted to $2.9 billion, with a total of 1,433 sales transactions.
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