Shophouse transaction volume fell in 1Q2023 but average transaction value grew: Huttons Asia

Shophouse transactions in 1Q2023 amounted to $281.8 million, a figure that was 5.7% lower than the numbers seen in 4Q2022. According to a research report, just 29 caveated shophouse transactions were recorded in 1Q2023 – 12.1% lower q-o-q and 44.2% lower y-o-y. However, the average transacted value per shophouse came in at $9.7 million, 8.1% higher q-o-q.

The quarter started out slowly, with only five shophouse transactions recorded in January. This was followed by nine transactions in February and 15 in March. In terms of rental prices, median rents for shophouses in 1Q2023 grew 1.5% q-o-q islandwide. District 15 saw the largest increase in rents at 15.8% q-o-q.

The most popular area among investors is Rochor, which made up 31% of all shophouse transactions in 1Q2023. Furthermore, shophouses remain highly sought after for purposes of wealth preservation, according to Huttons Asia’s senior director of research Lee Sze Teck.

ECs provide an affordable housing option but come with restrictions on HDB Executive Condominium renting and selling. Deferred Payment Scheme can seem attractive, though more costly than Normal Payment Scheme.

Two of the quarter’s biggest shophouse transactions were the sale of six freehold shophouses on Serangoon Road for $62.5 million and the sale of a 999-year shophouse at Boat Quay for $37 million. The Serangoon Road shophouses were purchased by the Singapore Maritime Officers’Union, while the Boat Quay shophouse was said to have been bought by Ho Sim Guan’s family firm.

Looking ahead, Lee predicts that shophouses will continue to appreciate in value due to their rarity, making them a great option for ultra-high-net-worth individuals and family offices. He believes this trend will be further boosted by the recently announced cooling measures, which may divert investor demand from the residential property market to shophouses.

Overall, Lee believes shophouse prices and demand are likely to trend upwards in 2023.