Archive for category: Misc

The shophouse market in Singapore experienced a slowdown in the second half of 2023, with only 53 shophouses worth a total of $428.2 million being transacted. This represents a decrease of 26.4% and 35.5% in the number of shophouses sold and total sales value respectively compared to the first half of the year. According to Knight Frank’s latest shophouse market report released on Jan 31, this was likely due to the high interest rate environment and other uncertainties in the market.

Executive Director, capital markets at Knight Frank Singapore, Mary Sai, stated that institutional buyers were cautious and withdrew from the market due to high interest rates and large price premiums. She also mentioned that the reported transactions may be lower than actual figures as some buyers prefer to keep a low profile.

In terms of prices, the average unit price for shophouse transactions fell by 6.1% to $5,116 psf based on land area compared to the first half of the year. This was mainly driven by a 34.2% drop in prices for leasehold shophouses. On the other hand, freehold shophouses saw a slight increase of 1%.

The most expensive transaction in the second half of 2023 was the sale of three units on Jalan Besar in District 8 for $38.5 million. District 8 remained the most active district for shophouse transactions with 16 units worth $132 million sold. This is attributed to the ongoing gentrification of the area and its transformation into a popular tourist spot.

Sai also highlighted that demand for conservation shophouses has remained strong due to their scarcity and historical significance. The most profitable transaction in the second half of 2023 was the sale of a shophouse at 37 Bussorah Street in the Kampong Glam Conservation Area, which saw a return of 1,196% for the seller after being held for 20 years.

For the whole of 2023, 132 shophouses were sold, representing a 30.9% decrease from the previous year. Freehold transactions made up the majority at 79.5% and saw a 31.4% decrease in units sold compared to the previous year.

While demand for shophouses remains strong, buyers have begun to resist high price premiums in the current market. Sai believes that prices will trend to more realistic levels this year and expects transaction activity to increase as the economy improves and interest rates stabilize.

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Knight Frank predicts shophouse sales value to come in between $1.1 billion and $1.2 billion for 2024. This shows that the shophouse market in Singapore remains resilient despite the slowdown in 2H2023 and buyers can expect more realistic prices in the year ahead. In conclusion, while there are uncertainties in the market, the demand for shophouses in Singapore remains intact due to their limited supply and potential for capital appreciation over the long term.

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