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

Shophouse transactions saw a slowdown in the first quarter of 2023 as the Lunar New Year festivities dampened the start of the quarter. According to a Huttons Asia research report, there were only 29 caveated shophouse transactions recorded in 1Q2023 — 12.1% lower q-o-q and 44.2% lower y-o-y, with a total transaction value of only $281.8 million.

This decrease in transaction volume was seen right from the start of the quarter when January saw only five shophouse transactions. In the following months, the numbers gradually picked up with nine and 15 transactions recorded in February and March respectively. Despite the downtrend in quarterly sales, the average transacted value per shophouse in 1Q2023 was 8.1% higher q-o-q at $9.7 million.

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This higher average transacted value was supported by two major transactions during the quarter — 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. Both were purchased by prominent entities such as the Singapore Maritime Officers’ Union and Tai Tak Estates, the holding firm of the family of the late banking tycoon Ho Sim Guan.

Median rents of shophouses in 1Q2023 saw a slight increase of 1.5% q-o-q islandwide. District 15 recorded the highest growth with median rents of shophouses in the area surging 15.8% q-o-q to reach $5.49 psf per month.

According to Lee Sze Teck, Huttons senior director of research, shophouses remain popular among investors due to its value as a form of wealth preservation. The Rochor planning area, which encompasses Little India and Jalan Besar, accounted for the most transactions in 1Q2023, making up approximately 31%.

The recent cooling measures announced on April 27, which includes a hike in Additional Buyer’s Stamp Duty for foreigners that purchase residential property to 60%, could potentially divert some demand to the shophouse market. Lee predicts that demand is likely to pick up in the coming months, and that prices of shophouses will trend upwards in 2023.