SMALL OFFICE: SOHOs, SOFOs, and SOVOs are attracting young urbanites who want to maximise their productivity
Commercial property: As traffic congestion becomes worse and rental costs increasingly go up, a major lifestyle change is spreading among young couples, singles and service-oriented providers who value their free time and lifestyle while at the same time controlling their expenses.
These young people want to avoid the hassle of getting stuck in traffic jams, which affects their productivity. They want the convenience of working and staying at the same location which saves their travelling time, hence increasing their efficiency.
These people, who comprise mainly entrepreneurs, traders, researchers, and independent professionals enjoy working in a peaceful and IT-driven environment. Some of these set-ups include advertising agencies, lawyer firms and even real estate agencies.
Skilled staff in support services and human resources, who don’t need to face the public or clients everyday, also find it unnecessary to have a full-fledged office.Briefly, most of these lifestyle office users value a flexible work schedule in a self-contained workplace, which allows them to plan their ‘eat, play, work, stay and social activities’ all within walking distance.
Terms for the small office spaces vary like Small Office Home Office (SOHO), Small Office Flexible Office (SOFO) or Small Office Versatile Office (SOVO).
All of them are built on commercial land with commercial title and are commonly found in mixed integrated developments. Pricing can somewhat vary. For example, the price of an Icon City’s SOVO can be RM1,000 psf and above compared to the price of Infinity Tower’s SOFO which is only RM700 psf even though it’s five minutes’ drive away from each other in Petaling Jaya area. This is due to factors such as the developer’s track record and project size.
SOHOs do not need a big floor area because with clever interior designing, much can be made from a small space. So far it’s the only type of small office governed under the Housing Development (Control and Licensing) Act 1966 (HDA). This is evidenced by the fine print of housing project advertisements that set out the unit sizes and price range, or the Sale & Purchase Agreements (SPA) that adopt Schedules G and H of the HDA.
SOFO units offer buyers greater flexibility to create a property of their choice — be it for residential dential or office use. All units are without internal partitions and therefore allow the owners or occupants the flexibility to customise or to fit-out the units to their requirements. Owners can opt to buy two units side-by-side and erect an internal connection. This concept is mainly introduced by trendsetting developers like OSK Property Holdings
Berhad and SP Setia Berhad.
Finally, SOVOs are mainly recognised for 100 per cent office use. These SOVO suites can be a great investment as the developer is keen to invest in its accessibility and telecommunication equipment as part of the property infrastructure.
With their commercial titles and part-residential features such as small kitchens and bathroom, these modest-sized units seem to appeal a lot to the public.
Investment risks: The process of acquiring such units is the same as buying a new residential property.
The difference — and this is the cool part — is that when buying such lifestyle offices, one’s loan can be exempted from the 70 per cent LTV (loan-to-value) limit imposed on buyers of their third properties onwards. This makes it an attractive third home alternative investment.
Projects with small units (below 1,500 sq ft) have seen better response than those with units of more than 2,000 sq ft due mainly to the affordability
Investors have to watch out for utility bills that will be charged under commercial rates, which are normally 30 per cent more than residential rates. Since there is no firm legal definition of SOHOs, SOVOs, SOFOs and designer suites to date, investors have to ensure the intent of their tenant, whether it is for office, residential or both.
To cater to the needs of the residents, there should be good internet connection, strong security, business meeting facilities to meet with clients and a location that’s close to the LRT or MRT station.
Alwin Aw is Assistant Marketing Manager of CBD Properties Sdn Bhd.