Strata units in industrial, retail sectors gaining popularity

August 2, 2011

Mickey Mouse homes – or homes below 500 square feet in area – are not new.

But the trend of smaller format units has caught on in the industrial and retail sectors as well.

Known as strata units, they are deliberately kept small to be affordable to retail investors.

Strata shops are usually no larger than 300 square feet, which is a fifth of the size of an average retail store such as Starbucks.

A 300 square feet strata shop costs between S$500,000 and S$1 million.

Analysts speaking at the recent Real Estate Developers’ Association of Singapore seminar said there is a growing interest in investing these smaller shops.

Research from Knight Frank shows the number of strata shops transacted in 2010 jumped 60 per cent from a year earlier to about 480 units.

The total transaction value almost doubled to about S$530 million.

So far, 241 strata shops with a total value of S$247 million have been transacted in the first half of this year.

Png Poh Soon, head of consultancy and research at Knight Frank, said: “We noted that more new strata shops have been released into the market. In the past when one talks about strata shops, one tends to think about Sim Lim Square, Peninsula Plaza, People’s Park Complex and older strata shopping malls.

“The new supply that has come on in the past year includes Space@Kovan, Vibes@East Coast and Viva Vista in Pasir Panjang.”

Analysts say the popularity of small format units even extends to factories.

Chia Siew Chuin, director of research & advisory at Colliers International, said: “The industrial market is not affected by the cooling measures. And we would expect non-traditional buyers of properties of industrial sector to continue to look at the industrial segment as they look for more sources or places to park their funds.”

Based on Colliers research, sales of these industrial units grew 20 per cent to around 900 in the first half of this year.

Around 80 per cent of these were priced below S$1 million. In the same period, more than half of all non-landed properties transacted cost more than S$1 million.

Still, while strata units may be more affordable, analysts note that they are also more difficult to sell.

Source : Channel NewsAsia – 2 Aug 2011