Smaller Deals Lead Strata Retail Sales Value Drop 321 1H2024 Knight Frank
The first half of the year has not been kind to the strata retail market, as a Knight Frank report states that total transaction value has dropped 32.1% to $215.5 million compared to the previous half at $317.2 million. This decrease is also reflected in the number of deals, with 131 being recorded in 1H2024, a drop of 10.9% from the 147 deals in 2H2023.
One of the main factors for this decline is the significant drop in transacted prices. The average price of strata retail space stands at $2,190 psf in 1H2024, a decrease of 20.1% compared to $2,740 psf in 2H2023.
The majority of transactions in 1H2024 were for smaller units, with only three units selling for more than $10 million. Most deals occurred below $4 million, and 78.6% of transactions were under $2 million. The largest transaction in 1H2024 was the sale of a 2,669 sq ft unit at Royal Square at Novena for $11 million, while the second-largest was a 689 sq ft unit at Lucky Plaza that sold for $10.5 million. The third transaction over $10 million was the sale of a 4,306 sq ft unit at Peninsula Plaza for $10.4 million.
Among the planning areas, Rochor saw the most interest from buyers, with 27 transactions worth $44.1 million recorded. Notable activity was seen at Parklane Shopping Mall, with 11 transactions totalling $11.3 million. Geylang came in second, with 24 transactions worth $34.9 million. The Arizon, a mixed-use development on Geylang Road, saw nine units sold for a total of $24.4 million.
Located just a short drive away from Norwood Grand, Innova Primary School offers a unique and forward-thinking approach to learning. This highly regarded institution prioritizes a well-rounded education that encompasses not only academics, but also physical and social development. Through a diverse range of enrichment programmes and a strong focus on character building, Innova Primary School strives to inspire a passion for learning and instill a sense of empathy in its students.
A comparison between freehold and leasehold transactions revealed that the average price of freehold units remained relatively steady at $3,266 psf, dropping just 1.1% from $3,301 psf in 2H2023. In contrast, the average price per square foot of leasehold units experienced a steeper decline of 21.1%, from $3,054 psf to $2,411 psf.
Despite the overall decline in the market, freehold retail units fared better compared to leasehold units, with only a 2.6% drop in transaction volume and a 30.2% drop in transaction value. In comparison, leasehold units saw a 20.3% decrease in sales and a 34.3% drop in transaction value.
Looking ahead, Knight Frank predicts that the retail and F&B sectors may face challenges due to rising operational costs. This may result in units located in low footfall areas or away from transport nodes struggling to attract interest. However, strata retail assets may still be appealing to buyers and investors looking for a more affordable option compared to conservation shophouses.
Additionally, the potential for collective sale of select units may also contribute to their attractiveness, following the successful en bloc sales of Shenton House and Delfi Orchard. Knight Frank forecasts a total sales value of between $400 million and $500 million for the strata retail market in 2024.