In the first part of this series about Strata-titled offices, we discuss the history of such properties, and give a sneak peek of where it stands in today’s market.
Believed to be originally an Australian concept, strata-title refers to the ownership of a unit in a multi-level development with some shared facilities and common areas. Such properties were first introduced in Singapore in the 1960s by the Urban Redevelopment Authority (URA).
In the 1970s, however, the market took up a preference for investment income from rental rather than strata-titled sales. The supply of strata-titled offices gradually decreased, and was eventually marginalised into small-scale developments or clusters of tiny units within larger mixed-use developments. According to estimates from Colliers International, strata-titled offices now take up just 14% of the total office stock in Singapore.
Adding to the number crunch is the highly convergent distribution of these offices with about 57% of them located in the Central Business District (CBD). Draw a slightly wider radius to take into account the central region, and 99% of these offices would be covered.
Despite their unpopularity 4 decades ago, the demand for strata-titled offices has recently seen a pick-up, further exacerbating the shortage of supply. In part two of this series, we explore why interest in such properties are on the rise, and discuss their investment potential.