_Singapore’s strata office market set for sustained growth in 2025
Among newer office assets, Woods Square in Woodlands (pictured) fetched a relatively high CAGR of 5.3% between 2021 and 2024. PHOTO: FAR EAST ORGANIZATION
[SINGAPORE] As we approach the midpoint of 2025 with an economy experiencing the ripple effects of a global trade slowdown, sales of strata-titled office space in Singapore continue to reflect a sustained appetite for office asset ownership. This reinforces the city-state’s reputation as a safe haven for investments.
Last year, the total sales volume of strata offices nationwide trended 6.8 per cent higher than the year before, with 330 transactions. This was primarily due to a 15 per cent increase in Central Business District (CBD) deals.
In comparison, sales transactions of strata office units in decentralised areas (fringe and suburban locations) were 8.3 per cent lower year on year, partly because of the lack of new sale launches in these regions.
When it comes to transaction prices, the CBD Core (principally the heart of the CBD, extending to Beach Road) had a 12.1 per cent year-on-year fall in average unit price to S$3,059 per square foot (psf). This can be attributed, in part, to transactions in older strata office developments, where the building age is over 20 years.
Meanwhile, the CBD Fringe (including the Orchard Planning Area) had a year-on-year price growth of 2.3 per cent to S$2,374 psf. Prices in decentralised areas were up 8.8 per cent at S$1,940 psf, a reversal from 2023 figures.
The launch of mixed-use development One Sophia in late 2024, at more than S$3,000 psf, lifted the average unit price of transactions in the entire CBD Fringe.
On average, strata office units in the CBD Core and CBD Fringe fetched price premiums of 57.7 per cent and 22.4 per cent, respectively, over those in decentralised areas in 2024.
Decentralised strata offices are typically priced lower, appealing to emerging businesses looking to own an office unit for use or investment.
Investment opportunities outside CBD
The scarcity and high price premiums, among other factors, of CBD strata office spaces could be a major driver in encouraging businesses to consider workspaces in suburban areas.
There has been no fresh supply of strata offices since March 2022, when new rules from the Urban Redevelopment Authority (URA) restricted strata subdivision of the commercial component of commercial and mixed-use developments within specific locations of the Central Area.
Considering URA’s plans to develop economic gateways in the east, west and north of Singapore, decentralised commercial hubs and well-connected fringe districts are expected to lead the next wave of demand.
Moving commercial spaces outside the CBD to regional nodes has its merits, including bringing jobs closer to homes, alleviating congestion, and creating conducive work environments to attract talent and business investments.
For startups and smaller businesses which do not require a large office footprint, decentralised offices fulfil key criteria, from affordability and scalability to talent pool access.
Such spaces are also hotbeds for businesses in new, innovative districts.
Woodlands North Coast has welcomed multinational companies such as German sensor maker SICK, and the Sungei Kadut Eco-District has been earmarked for the food, agritech and waste management industries.
Businesses seeking newer, quality office assets within proximity to dense residential and industrial enclaves have gravitated towards Vision Exchange in Jurong East, Paya Lebar Square in Paya Lebar, and Woods Square in Woodlands Regional Centre. These locations are popular for various tenant ventures such as wholesale trade, healthcare and management consultancy services.
Comparing the capital price growth trends of these three assets from 2021 to 2024, Woods Square had the highest compound annual growth rate (CAGR) at 5.3 per cent. Vision Exchange’s CAGR was 4.2 per cent, and that of Paya Lebar Square was 4 per cent.
Among the three decentralised properties, Paya Lebar Square has the highest-priced strata office units, having transacted at S$2,237 psf on average in 2024. The asset is also arguably helped by its proximity to the CBD.
Meanwhile, Woods Square surpassed Vision Exchange in price last year, with average unit prices of S$2,119 psf and S$2,080 psf, respectively.
In our view, the Northern Gateway shows the most promise among the three economic gateways. Near-term developments are likely, considering the upcoming Johor Bahru-Singapore Rapid Transit System Link, which is slated for completion by end-2026.
A window for businesses with lower rental thresholds
In decentralised areas, the average occupancy cost for businesses is also significantly lower than in Category 1 spaces, which are defined as good-quality office developments located in core business areas within the Downtown Core and Orchard planning areas. Category 2 locations refer to decentralised office spaces.
The rental gap between the two categories is substantial. For instance, the cost of leasing a 2,000-sq-ft office unit in a modern Downtown Core office building could be double that of one in a decentralised, good-quality office building with modern finishings.
Collectively, these factors suggest that demand for strata office space is poised for sustained growth, on the back of limited supply and Singapore’s enduring appeal to investors.
With the creation of new business precincts and infrastructure developments in the suburbs and closer to homes, the appeal of investing in strata offices in regional centres – coupled with their relative affordability compared with the CBD – will grow in the near to medium term.
In 2025, barring unforeseen economic conditions, we expect to see price growth of 1 to 2 per cent for well-located CBD Core strata offices, while lower-price base effects could translate to a higher price increase of beyond 3 per cent for strata office properties in decentralised areas.
Alice Tan is head of consultancy and Chalene Liu is assistant manager, consultancy, at Knight Frank
This article first appeared in The Business Times on 7 May 2025