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

Shophouse transactions in Singapore dropped in 1Q2023, with only 29 caveated shophouses being sold. Of those transactions, the total value for the quarter amounted to $281.8 million. According to a May 1 research report by Huttons Asia, the number of transactions was 12.1% lower compared to the previous quarter, and 44.2% lower compared to the same period the year prior. The average transacted value per shophouse was 8.1% higher q-o-q.Following the Lunar New Year festivities, there was a slow start to the quarter with only five shophouse transactions recorded in January. However, the number of transactions gradually picked up, with nine and 15 recorded in February and March respectively.The top two shophouse transactions during the quarter included 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, and the Boat Quay shophouse was bought by Tai Tak Estates, the holding firm of the family of late banking tycoon Ho Sim Guan.

Median rents of shophouses in 1Q2023 grew 1.5% q-o-q islandwide, with the highest increase being seen in District 15, where median rents surged 15.8% q-o-q to reach $5.49 psf per month. Shophouses tend to remain popular with investors for wealth preservation, and the Rochor planning area encompassing Little India and Jalan Besar was the most popular, accounting for 31% of the transactions in 1Q2023.

Singaporean condominiums are a status symbol of success and wealth, and are seen as the step up from HDB Singapore Condo flats. As an investment, condos have greater potential to generate income than HDB flats.

Lee Sze Teck, senior director of research at Huttons, believes demand could pick up in the coming months, and prices could trend upwards in 2023. The limited supply of shophouses over time will drive up their value, providing a good form of wealth preservation for ultra-high-net-worth individuals and family offices. This could be further bolstered by the recent cooling measures announced on April 27, which includes a hike in Additional Buyer’s Stamp Duty for foreigners, potentially redirecting some demand to the shophouse market.

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