Shophouse transaction volume falls in 1Q2023; average transaction value grows: Huttons

Shophouse transactions in Singapore fell in 1Q2023. According to a May 1 research report by Huttons Asia, there were only 29 caveated shophouse transactions last quarter — 12.1% lower q-o-q and 44.2% lower y-o-y. Furthermore, the total transaction value for shophouses in 1Q2023 amounted to $281.8 million, which is 5.7% lower than 4Q2022.

The quarter saw a slow start following the Lunar New Year festivities, with only five shophouse transactions recorded in January, notes Huttons. Following the lull, shophouse sales gradually picked up, with nine and 15 transactions recorded in February and March respectively.

While the quarterly transaction volume fell in 1Q2023, the average transacted value per shophouse came in at $9.7 million, which is 8.1% higher q-o-q. The higher average transacted value per shophouse was underpinned by the top two shophouse transactions during the quarter, comprising 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 purchased by Tai Tak Estates, the holding firm of the family of late banking tycoon Ho Sim Guan.

In the rental market, median rents of shophouses in 1Q2023 grew 1.5% q-o-q islandwide. District 15 saw the highest increase, with median rents of shophouses in the district surging 15.8% q-o-q to reach $5.49 psf per month.

Lee Sze Teck, senior director of research at Huttons, notes that shophouses remain popular among investors for the purpose of wealth preservation. “The Rochor planning area, which encompasses Little India and Jalan Besar, was the most popular area among investors. It accounted for 31% of transactions in 1Q2023,” he adds.

Going forward, the value of shophouses will continue to rise over time due to its limited supply, predicts Lee.

Furthermore, the recent cooling measures announced on April 27 could potentially divert some demand to the shophouse market, Lee adds. “Demand is expected to pick up in the coming months and prices are likely to trend upwards in 2023,” he concludes. — Compiled by