Who would have knew half a century back that the humble shophouse would be worth millions today. As their numbers decreased and rarity grew, so did their value. If a few millions would have gotten you baulking a few years back, the most recent $10.8 million, approximately $3,750 psf, for an Ann Siang road shophouse would have you out of your seats by now.
Foreigners and wealth funds are increasingly looking into investment opportunities in these rare commodities, especially those in the central business district (CBD). Shophouses’ popularity amongst the rich and affluent have leapfrogged in the past couple of decades despite rental prices having stayed stagnant. As some of these wealth funds are under pressure to utilise capital and expand portfolios, foreign purchases of shophouses in District 1 and 2 have picked up over the past couple of years. 99-year leasehold shophouses are now going for close to $3,000 psf.
Though the commercial leasing market has been on the downhill slide, tenants are still more willing to fork out say $18,000 for a renovated shophouse unit as compared to the higher rents in Grade A offices or shopping malls. It comes as no surprise then, that 2 shophouses in Pagoda street wold for $24.2 million at around $2,800 psf; and another 6 units in Amoy street went for $20.25 million or $2,411 psf to a Chinese and a Spanish investor respectively. The continued interest in this market segment will continue well into the year and next, as prices have risen by 10% despite a fall in transaction volume last year.