Singapore’s strata-titled commercial property market has recorded a notable upswing in the first half of 2025, with higher transaction values for both strata office and retail segments, according to real estate consultancy Knight Frank. The increase underscores sustained investor appetite for income-generating commercial assets, despite broader economic headwinds and interest rate uncertainties.
Market Overview
In its 1H2025 market report, Knight Frank highlighted that transaction volumes for strata office units and strata retail spaces remained healthy, even as the overall property market navigated a slower residential sector.
Key Highlights:
- Strata office transactions registered higher average prices per square foot (psf).
- Strata retail assets saw increased demand in prime and city-fringe locations.
- Limited supply of high-quality commercial space kept values resilient.
This performance reflects a growing preference among investors for tangible, income-producing assets that are less affected by residential cooling measures.
Strata Office Market Performance
The strata office market continued to attract high-net-worth individuals, family offices, and institutional investors seeking stable returns.
Knight Frank’s findings include:
- Average psf prices rose by an estimated 3–5% in the Core Central Region (CCR) compared to 2H2024.
- Demand remained steady for smaller office units ranging from 500 to 2,000 sq ft, catering to professional firms and start-ups.
- Buildings with modern facilities and proximity to MRT stations commanded premium prices.
Why the interest?
Strata office units offer investors full ownership, enabling flexibility in leasing or owner-occupation, without the restrictions imposed on certain other asset classes. Additionally, with Singapore positioning itself as a hub for finance, technology, and family office operations, the outlook for office demand remains stable.
Strata Retail Market Performance
Strata retail transactions in prime shopping belts and suburban malls also saw an uptick in both volume and value.
Notable trends:
- Prime Orchard Road units achieved higher psf rates due to strong tourist footfall and luxury retail demand.
- Suburban retail spaces in areas like Tampines, Jurong, and Woodlands remained popular with F&B operators and essential service providers.
- Units within integrated developments, where residential, commercial, and transport facilities are combined, experienced strong bidding interest.
The rise in values was partly driven by the return of robust retail activity post-pandemic, with food and beverage tenants expanding aggressively and retailers capitalising on Singapore’s stable consumer spending patterns.
Drivers of the Price Growth
Knight Frank identified several factors behind the price resilience in both strata office and retail segments:
- Limited New Supply:
Government land sales (GLS) have been focused on residential and mixed-use projects, with fewer pure commercial developments entering the pipeline. - Investor Diversification:
Investors are diversifying away from residential assets, given the impact of cooling measures and additional buyer stamp duties (ABSD). - Stable Rental Yields:
Commercial properties in good locations continue to deliver competitive yields, making them attractive compared to low bank deposit rates. - Long-Term Capital Appreciation:
Premium locations and scarcity of freehold/999-year leasehold titles keep upward pressure on prices.
Buyer Profiles in 1H2025
The report noted that the buyer pool for strata commercial properties was diverse:
- Local Investors: Often prefer strata retail units in suburban malls for stable rental income.
- Foreign Investors: Drawn to Singapore’s transparent legal system and stable economy.
- Business Owners: Purchasing office or retail space for their own use to save on long-term rental expenses.
Interestingly, several transactions involved portfolio acquisitions, where investors purchased multiple units within the same development to gain greater control over tenant mix and property management.
Outlook for 2H2025
Knight Frank expects the positive momentum to continue into the second half of the year, though at a moderated pace due to macroeconomic uncertainties.
Forecast Highlights:
- Strata office: Likely to remain supported by demand from professional services, tech, and family offices.
- Strata retail: Suburban and integrated developments will lead transaction activity, with prime Orchard Road spaces retaining their premium status.
- Pricing: While growth may slow, a correction is unlikely given limited supply and strong demand fundamentals.
Investors are advised to focus on well-located properties with strong tenant covenants, as these are more resilient during market fluctuations.
What This Means for Investors
For investors, the rise in strata office and retail values in 1H2025 signals:
- A healthy commercial property sector that remains attractive even in a high-interest-rate environment.
- Opportunities to secure assets with both yield and long-term capital growth potential.
- A reminder that location and tenant quality are critical determinants of performance in the strata market.
Given the scarcity of new supply and Singapore’s status as a global business hub, demand for such assets is likely to remain steady, especially among buyers looking for stability in uncertain times.
Conclusion
The first half of 2025 has shown that strata office and retail assets in Singapore remain resilient and in demand, with Knight Frank’s data highlighting steady growth in transaction values. Limited supply, stable yields, and investor diversification away from residential property have kept the sector buoyant.
Looking ahead, the market is expected to maintain its strength, offering opportunities for both institutional and individual investors. Those seeking long-term, income-generating assets should keep a close watch on premium strata commercial units — because in Singapore’s competitive property landscape, high-quality commercial real estate is a prize worth holding.
