Of course, in terms of volume sales of strata office assets are still lower than in 2012, but that historic boom occurred before the introduction of Total Debt Servicing Ratio or TDSR rules. Nevertheless, sales in this category of developments are gradually resuming the rise that began in 2015, after the drop that the TDSR caused beginning 2013.
In 2012, the market saw an all-time high of strata titled office sales, with recorded revenues of new buildings plus re-sales of old developments reaching S$2.29 billion.
This figure is almost triple the amount of revenues office developments fetched in 2017, which was just S$760 million.
Post TDSR, fewer consumers were able to access the credit previous buyers of office strata utilized. Besides, the heavy supply of such properties in the pre-TDSR period had caused a drop in rental income and made investing in office space somewhat unattractive.
That trend has gradually changed, and now there seems to be fewer investors in that sector than willing buyers; making investment in office-strata developments worthwhile.
While the ratio of supply to demand was estimated to be 30:70 pre-TDSR, the ratio could be seen changing post-TDSR soon getting to 70:30, status quo that is only now being shaken by the introduction of new cooling measures in the residential investment sector.
In any case, potential buyers of office strata units recognize the benefits that come with owning such space as opposed to renting, especially considering the volatility of rental costs.
Families as well as general investors are comfortable knowing their business revenues will not be drastically slashed by massive rental costs, and one way of ensuring they are well cushioned is to buy their own strata office units.
Developers have high hopes there will be sufficient demand for strata office units not only from local investors but also foreign ones especially from Malaysia and Hong Kong as well as China and Indonesia, who appreciate the need to hedge against fluctuating rental prices.