Strata Offices Prices Fall 201 H O H 1H2024 Knight Frank
A recent report by Knight Frank has shown a 20.1% drop in the average price of strata office spaces in the first half of 2024. This figure fell from $2,740 per square foot (psf) in the second half of 2023 to $2,190 psf in the first half of 2024.
Despite this decline, the strata office market has remained relatively stable in terms of transaction volume, with 154 transactions in the first half of 2024 compared to 156 in the second half of 2023.
However, the decrease in psf prices has led to a 15.6% decline in total transaction value, which has fallen from $518 million in the second half of 2023 to $437.3 million in the first half of 2024.
The top five biggest transactions by absolute price in the first six months of the year were mainly comprised of units at Vision Exchange and Suntec City. Two units at Vision Exchange, measuring 14,015 sq ft and 10,775 sq ft, were sold for $33.3 million ($2,378 psf) and $25.7 million ($2,381 psf) respectively in February.
Similarly, Suntec City saw the next two highest transactions with the sale of a 4,833 sq ft unit on the 36th floor and a 4,779 sq ft unit on the 22nd floor of Tower Three. The unit on the 36th floor was sold for approximately $16 million ($3,311 psf), making it the third-highest strata office transaction in the first half of the year. This was followed by the sale of the unit on the 22nd floor for $15.3 million ($3,200 psf).
The top five was rounded out by the sale of a 2,325 sq ft unit on the ninth floor of Connexion, a mixed-use development along Farrer Park Station Road. This unit was sold for $11.6 million ($5,000 psf) in May, recording the highest transaction for the development in terms of absolute price.
According to Knight Frank, the Downtown Core Planning Area attracted the most buyers in the first half of 2024, with 47 transactions and a combined value of $190.1 million. The area was supported by the sale of units in International Plaza and Solitaire on Cecil, the only new freehold strata office building within the CBD. Knight Frank believes that there were likely more strata office transactions in the first half of the year that were not accounted for as no caveats were lodged.
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The decline in strata office prices in the first half of 2024 was driven by decreases in both freehold and leasehold assets. However, Knight Frank’s data shows that the average price of freehold units saw a slower rate of decline compared to leasehold units.
The average price of freehold strata office spaces fell by 13.3% to $2,804 psf in the first half of 2024 from $3,235 psf in the second half of 2023. Meanwhile, the average price of leasehold strata units saw a steeper drop of 17.1% to $2,031 psf in the first half of 2024 from $2,448 psf in the second half of 2023.
Despite this decline, there was an increase in transaction volume for freehold office units, with 49 deals in the first half of 2024 compared to 42 in the second half of 2023. However, the total sales value decreased by 49% to $115.4 million in the first half of 2024 from $226.3 million in the second half of 2023.
Conversely, there was an increase in the total sales value of leasehold strata office units, which grew by 10.4% to $321.9 million in the first half of 2024 from $291.7 million in the second half of 2023, despite a decrease in the number of units sold. There were 105 leasehold strata office deals in the first half of 2024, a 7.9% decrease compared to 114 in the second half of 2023.
Knight Frank notes that despite a lack of new inventory, strata office transaction volume has remained stable over the past 12 to 18 months. It expects this trend to continue with the launch of 108 Robinson Road and VisionCrest Orchard, two freehold office buildings at Robinson Road and Penang Road respectively, since March and July.
The firm predicts that the strata office market could achieve a total sales value of $1 billion for the whole of 2024.