Singapore strata office sales hit 7-year high of S$1.2b in 2021

It is a 90% increase from 2020 totals and is the highest sales recorded since 2014.

Strata office transaction volumes in Singapore increased 56.8% y-o-y to 334 transactions in 2021 (165 in H2 2021 and 169 transactions in H1 2021). In comparison, there were only 213 transactions recorded in 2020, when sentiment was hit by the COVID-19 pandemic. 

According to Knight Frank, sales volume largely recovered to pre-pandemic levels in 2021, similar to the 331 in 2018 and 308 in 2019. 

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The total transacted value in 2021 recorded an even larger improvement, grossing total sales of S$450.8 million and S$703.5 million respectively in H2 2021 and H1 2021. This translated to about S$1.2 billion in total sales, a record high since 2014 and an almost 90.0% surge compared to 2020. While average unit prices for 2021 remained largely similar at S$2,276 psf (0.4% y-o-y increase), larger quantum sales materialised. 

Good quality strata office space located in the prime District 1 consistently topped sales in terms of quantum, with the S$53.1 million sale of the ninth floor of Samsung Hub the top value sale in 2021 (excluding whole building sales). In H2 2021, the podium of GB building was sold for S$25.5 million to Dia-Globe (Singapore). Another two full floor office units on the third and eight floors were sold to the same buyer for S$26.6 million, totalling 22% of the building’s total strata area, a notable stake in the event of a collective sale. 

District 1 also accounted for 29.9% of total sales volume in 2021. A hundred transactions were recorded in District 1 for the whole of 2021, more than double that in 2020. Strata office buildings with a notable volume of transactions included Suntec City with 20 transactions, and SBF Center with 11 transactions. Total transaction values in the district also grossed S$731.2 million, a 141.7% spike from 2020. 

By strata area, about 69.5% of the strata offices transacted were below 1,000 sf, and might stem from demand from owner-occupiers rightsizing their office operational footprint to include flexible workplace practices, while at the same time not having to worry about fluctuating rental cycles. 

There were no new launches in 2021, with all sales classified under resale transactions. Newer developments which obtained their temporary occupation permits (TOP) in 2020 included Woods Square which sold 12 units in 2021, and Centrium Square which sold 13 units in the same period. 

Comparing freehold and leasehold strata office performance 

Out of the 334 strata office transactions in 2021, 215 had a leasehold tenure (up from 121 in 2020) while the other 119 were of freehold tenure (up from 92 in 2020). About 35.6% of total transaction volume was freehold. 

While both leasehold and freehold transaction values dropped on a halfyearly basis in H2 2021, transaction values for 2021 as a whole were still higher when compared to 2020. Total leasehold strata office transaction values increased by 104.0% y-o-y to S$838.3 million in 2021. Freehold transaction values also expanded by 60.2% y-o-y to S$315.9 million during the year.

Unit prices of leasehold and freehold transactions likewise showed a decline from H1 2021 to H2 2021. However, on a yearly basis, average unit prices for freehold strata offices increased by 3.3% from S$2,351 psf in 2020 to S$2,430 psf from 2021 as a result of price jumps in H1 2021. Leasehold strata offices recorded a marginal 0.2% decrease from S$2,228 psf in 2020 to S$2,223 psf in 2021.

Market outlook 

Demand for strata office units is expected to grow from private wealth and family offices, and Small-andMedium Enterprises (SMEs) looking to right-size office space requirements in the technologically enhanced post pandemic era. 

Given these factors, the lack of new strata office supply in the medium-term and some spillover investor interest from the private residential market as a result of the cooling measures announced on 15 December 2021, both investor and owner occupier demand that might flow into the strata office market in 2022 could translate to an amount of about S$1.0 billion.