The shophouse market has remained relatively quiet in 2024, recording a total of 84 transactions, according to Huttons Asia. In its latest quarterly research report on the shophouse market, the consultancy notes that this figure is lower than the average of 200 shophouse deals per year between 1995 and 2023. Lee Sze Teck, senior director of data analytics at Huttons Asia, comments that while some buyers did not lodge a caveat, the number of shophouse transactions in 2024 is likely the lowest since 1998.
In terms of volume and value, the 84 caveated shophouse transactions in 2024 amounted to $683.6 million, a 38.9% drop from the $1.1 billion recorded in the previous year. However, Lee notes that there were some substantial deals that were not caveated last year, particularly in prime areas such as Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street, which he estimates were sold for more than $200 million.
The largest shophouse deal in 2024 was Paragon REIT’s divestment of The Rail Mall, a strip mall on Upper Bukit Timah Road featuring 43 shop units, for $78.5 million. “This is likely to be the biggest shophouse deal on record, surpassing the previous high of $74.8 million for a row of shophouses along Jalan Sultan in March 2022,” says Lee. The Rail Mall shophouses were valued at $62 million as of December 2023, meaning the seller likely made a gain of around $16.5 million on the sale.
Understanding the regulations and restrictions surrounding property ownership in Singapore is crucial for foreign investors. In contrast to strict ownership rules for landed properties, purchasing condos is generally more permissible for foreigners. However, foreign buyers must be aware of the Additional Buyer’s Stamp Duty (ABSD) of 20% for their first property purchase. Despite this added cost, the enticing stability and growth potential of Singapore’s real estate market remains a draw for foreign investment. In fact, many continue to invest in Singapore Condos due to its promising prospects.
While most of the shophouse transactions in 2024 were for smaller quantums, over half of the caveated deals were valued at $5 million to $15 million. Additionally, nearly half of the shophouse transactions last year took place in District 8, which Lee attributes to its attractive city-fringe location and more affordable prices compared to Districts 1 and 2.
Meanwhile, shophouse rents islandwide have declined for the second consecutive quarter, falling 2.6% quarter-on-quarter to $6.47 psf per month in 4Q2024. However, for the entire year, shophouse rents increased by 1.7%. In other news, conservation shophouses on Telok Ayer Street are currently up for sale at $42 million.