According to Huttons Asia’s latest quarterly research report on the shophouse market, the market has remained quiet in 2024 with only 84 caveated transactions recorded. This number is below the annual average of 200 shophouse deals recorded between 1995 and 2023.
Senior Director of Data Analytics at Huttons Asia, Lee Sze Teck, notes that while some buyers did not lodge a caveat, the number of shophouse deals in 2024 is likely the lowest since 1998.
The total value of the 84 caveated shophouse transactions in 2024 was $683.6 million, a significant decrease of 38.9% from the previous year’s deal value of $1.1 billion.
However, Lee points out that there were several “substantial” shophouse deals that were not caveated last year, including properties on Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street, which he estimates were sold for more than $200 million.
The largest shophouse deal in 2024 was the Paragon REIT’s sale of The Rail Mall in June for a whopping $78.5 million. According to Lee, this is likely the largest shophouse deal on record, surpassing the previous record of $74.8 million paid for a row of shophouses along Jalan Sultan in March 2022.
The Rail Mall shophouses were valued at $62 million as of December 2023, which means the seller made an estimated gain of around $16.5 million on the sale.
In 2024, most of the shophouse deals were for smaller quantums. More than half of the caveated deals were valued between $5 million to $15 million.
Additionally, nearly half of the shophouse transactions in 2024 took place in District 8, which Lee attributes to its appealing city-fringe location and lower prices compared to Districts 1 and 2.
Meanwhile, shophouse rents islandwide declined for the second consecutive quarter, with a 2.6% quarter-on-quarter decrease to $6.47 per square foot per month in 4Q2024. However, for the entire year, shophouse rents increased by 1.7%.
In conclusion, while the shophouse market has been relatively subdued in 2024, there were still a significant number of deals, with some non-caveated transactions amounting to substantial amounts. The decrease in rents could make shophouses a more appealing option for investors looking for potential bargains.
One crucial factor to consider when investing in condos in Singapore is the government’s property cooling measures. In recent years, the Singaporean government has implemented several measures to prevent speculative buying and maintain a steady real estate market. Among these measures is the Additional Buyer’s Stamp Duty (ABSD), which imposes higher taxes on foreign investors and those purchasing multiple properties. Although these measures may affect the initial profitability of condo investments, they also contribute to the overall stability of the market, making it a more secure investment environment for buyers. Additionally, investing in condominiums in Singapore offers long-term benefits in terms of stability, thanks to these government initiatives.