Nearly $2 billion was sold in shophouses last year, more than both 2019 and 2020’s combined sales. Investors were interested in defensive assets like shophouses during the Covid-19 pandemic, a report by Knight Frank Singapore said.
In the latest property cooling measures, shophouses that can be used for business will be exempt from extra buyer and seller stamp duty, say market experts. This will make this asset class more desirable. They can buy commercial shophouses that have been fully zoned for business use.
This is because shophouse districts are going through gentrification, which is going to keep people interested in buying. In 2022, the shophouse market is expected to be worth more than $2 billion, says Mary Sai, executive director of capital markets for Knight Frank Singapore.
According to a real estate consulting firm, shophouse sales in this area hit an all-time high of $1.9 billion in 2021, up from $915.9 million in 2019 and $912.7 million in 2020.
Analysts say this is because the economy is getting better, interest rates are low, and there is a lot of demand for shophouses because they have a lot of history and are hard to find.
It was lower than the highest number of transactions, 291 in 2012, but overall sales value hit a new record high last year. More than half of all deals for shophouses worth more than $5 million were made last year.
There were 194 deals for freehold shophouses worth $1.5 billion last year, up from 128 deals worth $789.6 million in 2020, when there were only 128 deals.
50 leasehold shops sold last year, up from just 17 in 2020. Ms Sai said that about 60% of leasehold sales took place in Districts 1 and 2. The Tanjong Pagar conservation area saw 22 leasehold sales worth an average of $8.8 million each, she said.
People who work for JLL, which is selling a historic shophouse at 51 Neil Road in Singapore, say the property is close to two well-known F&B and lifestyle areas, Duxton Hill and Keong Saik. It’s also near the upcoming Maxwell MRT station.
In JLL’s words, the guide price is $16.2 million. That works out to $2,700 per square foot (psf) on the approximate built-up area.
Kate Leong, a director at JLL Capital Markets, said: “51 Neil Road is in the Tanjong Pagar area, where a lot of work is being done to improve and change it.”
In 2021, unit prices for freehold shophouses on land will be about $4,414 per square foot, which is a 19.6% increase over the year before. Leasehold shophouses on land will be about $5,100 per square foot in 2021, which is a 17% increase over the year before.
Ms. Sai told us: “In Districts 1 and 2, the majority of leasehold sales took place. This meant that average leasehold unit prices were about 15.5% higher than for freehold sales, which took place mostly in Districts 8, 14, or 15.
“Districts 1 and 2 are mostly areas that have been gentrified, which means they charge more for things. People are moving into more and more places like Little India in District 8. Even though they are more affordable, these areas are also being gentrified.
Districts like Joo Chiat, where gentrification is still in its early stages, can expect to see a lot of change soon rather than later.
There were three mixed-use redevelopment sites at Duke’s Road and Bukit Timah that were sold together for $53.9 million last year, which was the best deal.
RB Family Office bought the Porcelain Hotel that is located at the Kreta Ayer conservation area for $90 million over two land plots. The sale of the Porcelain Hotel was separate.
For almost 10 times its original price of $35 million, a pair of shophouses on South Bridge Road were sold in August. They had been owned by a Singapore-based company owned by a Chinese citizen for more than 15 years.