» Strata-shop sales last year a
record $661m
Straits Times: Sat, May 12
THE strata-shop segment is
roaring.
Brisk sales totalled a record $661
million last year, partly driven by
residential cooling measures that
have diverted funds to non-
residential properties.
Analysis of caveats lodged with
the Urban Redevelopment
Authority by R'ST Research
found a total of 615 strata-shop
units transacted last year - just
under the record 632 strata
shops totalling $656 million sold
in 2010.
Sim Lim Square topped the
charts with 33 strata-shop units
changing hands, followed by
Icon @ Changi with 29 units and
Space @ Kovan with 28 deals
inked.
R'ST Research director Ong Kah
Seng said that a record number
of 161 strata shops were sold on
the primary market due to a
slew of attractive new launches.
The robust demand also comes
on the back of a dearth of new
strata-shop projects in recent
years, with many existing strata
shops currently in older malls
such as Peninsular Plaza,
People's Park Centre and Lucky
Plaza.
The ample supply of newer
choices on the market has
attracted more interest, leading
to the resale market taking a hit
with volumes slowing by 9 per
cent last year, compared to
2010.
Mr Ong noted that the
popularity of strata shops is
partly due to the slew of cooling
measures in the housing market,
which introduced tighter
financing rules and additional
stamp duties.
Investors were prompted to look
towards alternative real estate
investments to park their cash
instead, in the light of rock-
bottom bank interest rates.
'(Strata shops) remain limited in
supply, suggesting there may be
possible long-term upside, or
alternatively, potential for en
bloc redevelopment in selected
ageing strata-commercial
properties,' Mr Ong added.
'Rising business costs have also
led to some retailers buying
strata shops to have more
certainty in running costs.'
Higher demand for strata-shop
units continued in the first three
months of the year, with 107
units sold by developers - the
highest level in almost 10 years.
This could be due to prices in
the strata-industrial segment
rocketing, leading to investors
turning their eye to the strata-
shop and strata-office segments
instead, Mr Ong said.
However, the smaller size and
more affordable price of shop
space has seen the sector gain
more in popularity compared to
office space.
But he cited as a key concern
the lack of overall control in the
running of strata-titled malls,
compared to a single- owner
mall where concerted effort is
made to manage the tenant mix.
'As strata-shop users have the
freedom to operate their
business according to their liking,
the overall desired vibrancy of
the retail development cluster
may not be achieved... There
may be duplications and
competition in services and retail
offerings within the same
development,' he noted.
Still, although there are concerns
of speculation in the strata-shop
segment, Mr Ong emphasised
that these are not as pressing as
worries of speculative froth in
the strata-industrial market and
are unlikely to trigger cooling
measures.
This is because high industrial
property prices have a trickle-
down impact on the business
costs of small and medium- sized
enterprises.
'(On the other hand), serious
retailers generally have the
option of being located in a
single-owner mall, which is also
likely to be better conceptualised
than a strata-shop ownership
development.'
He added that the prospects for
new strata shops remain positive,
though only if speculative activity
is kept in check or moderated.
For buyers of older strata shops,
however, the main concern is for
the upkeep of the ageing
property.
While some of these shops may
still offer niche services, strata-
titled malls might have already
lost their relevance with modern
shopping in Singapore's fast-
changing retail landscape.
[email protected]
Source: The Straits Times ©
Singapore Press Holdings Ltd.
