Published 25 January 2011
The Business Times
By Lynette Khoo
Total value of commercial transactions in 2010 rises 104%
The buoyant economy, strong domestic demand and rental uptrend has translated to robust activities in the commercial property sector last year.
The total value of commercial transactions last year surged 104 per cent on the back of a 57 per cent jump in the number of these transactions.
‘The pick-up in commercial resale activity was driven by factors such as the recovery in the economy, strong domestic demand, improving rents and restored local and foreign investor confidence in the market,’ Knight Frank says in the report.
Strata office units emerged as the star player, with particular interest seen in the centrally located and high-value strata offices.
Some 387 office properties changed hands last year, compared with 209 in 2009, with the value of these transactions surging by 165 per cent to $850.06 million.
The highest number of transactions in the strata office segment fell in the $1 million to $2 million price bracket, comprising units in The Central and International Plaza.
The transacted units were priced in the range of $1,500 to $2,000 per square foot (psf) and are typically sized at just below 1,000 sq ft. Knight Frank noted that units in these buildings were in demand for their centralised location, proximity to the MRT station and affordable quantum.
There was strong foreign interest in strata office units, with the number of foreign purchases surging by 130 per cent from a year ago.
‘Due to the increase in office rentals, investors have been buying strata office units for owner occupation to protect themselves from the volatile office rental cycle,’ Knight Frank said.
As for the strata shops segment, the number of transactions rose 58 per cent to 484 deals and the combined value of these transactions jumped 92 per cent to $532.94 million.
The majority of these transactions came under the below $500,000 and the $500,000 to $1 million categories – which either offer exposure to high pedestrian traffic and good access, potential growth areas, affordable quantum price or attractive rental yields. These could be found in Bukit Timah Shopping Centre, People’s Park Complex and Golden Mile Complex.
There were also strong activities in the new mixed developments such as Viva Vista in South Buona Vista and Peninsula Plaza, Knight Frank pointed out.
Compared to the strata shops and strata offices, shophouse transactions were less active, given the limited supply and higher investment quantum.
The bulk of shophouse transactions were found in the $1 million to $1.99 million and the $2 million to $4.99 million price brackets, mainly in District 1 and 2.
‘Shophouses in these areas are popular because of limited supply, good lettability, strong demand from F&B tenants and potential capital appreciation for the freehold properties,’ Knight Frank said.