Shophouse market sees lower transactions and rents in 3Q2023: PropNex

The performance of Singapore’s commercial shophouse market was more subdued in 3Q2023, with both transactions and rents easing compared to the previous quarter. A total of 38 shophouse transactions valued at $350.8 million were recorded in the third quarter based on caveats lodged. This was a 19% drop from 2Q2023, when 47 deals worth over $433.5 million were recorded.

On a year-on-year basis, shophouse transactions were up 5.6% from the same period in 2022, while transaction value was 2.3% higher. Of the 38 shophouse deals in the third quarter, most were for fringe areas such as Districts 8 and 14. District 8 saw the highest number of transactions at nine units, while District 14 registered six deals.

Get ready to explore the unique offerings of Holland Drive Condo‘s shopping centers and find something special to make your day a bit brighter!

The largest shophouse transaction in 3Q2023 was the sale of an 11,947 sq ft freehold shophouse along Cheong Chin Nam Road in the Beauty World area. The shophouse changed hands for $41 million or $3,432 psf in September.

In terms of price trends, price growth across districts was uneven in 3Q2023 due to fluctuating sales volume. For freehold and 999-year leasehold shophouses, average unit price on the land area in Districts 7 and 8 grew to $5,679 psf, while in Districts 14 and 15, prices plunged to $2,375 psf.

Shophouse rents in 3Q2023 declined from the peak of $6.21 psf pm logged in 2Q2023 to $5.97 psf pm. However, leasing volume remained steady, with 926 rental contracts valued at $9.2 million signed last quarter.

Going into 2023, PropNex predicts a more subdued performance for the shophouse market due to limited selection of choice shophouses for sale as well as firm prices. Investment appetite is likely to remain “fairly resilient” however, given the scarcity and defensive nature of such assets, it adds. The recovery in tourism, along with the growth in the services sector, should also support the shophouse rental market.