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

Shophouse transactions decreased in the first quarter of 2023. According to Huttons Asia, the number of shophouse transactions caused concern, coming in at 12.1% lower when compared to the fourth quarter of 2022 and 44.2% lower year-over-year. The total transaction value was also 5.7% lower than the previous quarter.

The start of the quarter proved to be slow, with only five shophouse transactions recorded in January. This increased slightly in February and March, though transactions still stalled in comparison. Despite the reduced volume, the average transacted value of a shophouse came in at $9.7 million for the quarter, 8.1% higher when compared to the fourth quarter of 2022. The top two transactions during this period were the purchase of six freehold shophouses on Serangoon Road for $62.5 million, as well as a 999-year shophouse on Boat Quay for $37 million.

The rental market returned promising results, with a 1.5% q-o-q islandwide median rent increase across shophouses. District 15 saw the largest surge, up 15.8% from the previous quarter reaching $5.49 psf per month. This popularity is what Lee Sze Teck, Senior Director of Research at Huttons, attributes shophouse’s primary appeal to.

“The Rochor planning area which encompasses Little India and Jalan Besar is the most popular area among investors. It accounted for 31% of transactions in 1Q2023,” he adds. Further to this, the recent cooling measures announced on April 27 – which include a hike in Additional Buyer’s Stamp Duty for foreigners buying a residential property to 60% – could potentially divert some demand to the shophouse market.

These factors, combined with the threat of limited supply, are set to keep the value of shophouses increasing over time. As a result, Lee notes that they provide good wealth preservation for ultra-high-net-worth individuals and family offices.

Singapore seeks to rejuvenate Bukit Timah with a Railway Corridor development and Beauty World rejuvenation plan to enhance The Myst Bukit Timah connectivity and add green spaces.

“Demand is expected to pick up in the coming months and prices are likely to trend upwards in 2023,” Lee concludes.