Here are the notable deals in Singapore’s strata retail market in H2 2021

One was the sale of strata units at Sultan Plaza for S$25.3m.

Singapore strata retail transactions recorded total sales value of S$496.5 million in 2021, some S$251.6 million of which were from H2 2021. 

According to Knight Frank, this represented the highest sales value recorded since the last peak in 2017 when 217 units were transacted for S$523.3 million. With more units changing hands accounting for 280 units in 2021, this indicated that there were more smaller-sized deals of less than S$1.5 million. 

Here’s more from Knight Frank:

Factors driving this possibly included the blossoming of new enterprises and local brands establishing a foothold in the retail market, as retailers take up smaller footprints to kick-off new ventures. Additionally, the increasingly-gentrified and higher occupational costs of shophouses might have propelled some retailers to move out and consider more affordable strata retail space options when current prices are at a bargain. 

In H2 2021, notable deals included the sale of strata retail units at Sultan Plaza for S$25.3 million and New World Centre for S$17.3 million in July. Given that location is key, as accessibility to and visibility of a shopfront would often impact the flow of shoppers into a retail store, many retailers are on a lookout for such opportunities in the strata retail market. Out of the top five deals reported between July and December 2021, four of the deals clinched were of retail units located at the first or basement level in the respective developments. 

Another key deal in H2 2021 was the sale of ten cloud kitchen units at CT Hub 2 from July to September 2021 for a total of about S$7.4 million. This is reflective of the current purchasing behaviour of consumers where the pandemic has driven up the demand for food delivery services and takeaway orders. Cloud kitchens serve this very purpose in the pandemic era. 

Comparing freehold and leasehold strata retail performance 

In the last six months of 2021, 74 freehold and 52 leasehold units were sold, greater than the 56 freehold and 33 leasehold units transacted in the same period a year ago. Between H2 2020 and H2 2021, the average price for freehold strata retail units expanded by 15.5% y-o-y to S$3,096 psf, but prices for leasehold strata units fell by 34.3% y-o-y to SS$1,555 psf. 

Freehold units continue to be preferred compared to leasehold units. Therefore, a total of 160 freehold units averaging S$3,198 psf were sold in 2021, ahead of the 120 leasehold units which averaged at S$2,038 psf in the same period.

Market outlook 

Given that the retail market did not have much of an opportunity to recover in 2021 with the constant U-turn to regressive measures, Knight Frank envisages retailers of strata retail units to remain cautiously optimistic in 2022 as the long-waited recovery in the retail sector takes hold.  

Many strata retail owners are currently not in a hurry to sell their units unless reasonable offers are made. And as interest in such units picks up due to the current affordability, the strata retail market is projected to report moderate recovery likely in the second half of 2022 where the total sales value for the whole year is forecasted to hover around S$500 million.