Shophouses have been in the spotlight of late as demand for these rare properties continues to rise.
These properties are often steeped with architectural heritage and many have conservation statuses.
Investors turn attention to shophouses as stamp duties for residential properties increase
As interest and demand for shophouses heighten, analysts are expecting total transaction values to hit $1.4 billion this year.
The rise has been continuous since 2016 when the total transaction value was $709 million. Last year, $1 billion exchanged hands in the shophouse sector.
Investors are turning more to commercial properties as the residential property market was hit by a fresh round of cooling measures this July, making it more difficult for buyers to afford second and subsequent properties while taking a large chunk of sales profits.
Rules in the commercial real estate market are less stringent. For example, foreigners are allowed to purchase commercial properties here while they are not allowed to acquire landed homes in good-class bungalow areas.
Shophouses also tend to be of smaller sizes hence making them more palatable to buyers as compared to entire blocks of high-rise buildings. When sold in multiple continuous blocks, shophouses may fetch even higher prices.
Conservation status of shophouses a plus but provisions required
More than 90% of the 7,200 shophouses in Singapore are gazetted for conservation, often in popular areas fertile for businesses.
Areas, where shophouses are in demand, include the Central Business District (CBD) and historic districts such as Boat Quay, Chinatown, Kampong Glam and Little India. Off the central region, areas such as Jalan Besar, Joo Chiat and Kovan also tend to attract much buyer-interest.
While these may attract buyers, their conservation status could, however, put a slight kink in renovation processes as provisions need to be made to adhere to the regulations for shophouse-conservation.
The prices of shophouses have risen almost 20% to $4,469 psf this year, up from the $3,736 psf last year. Earlier in the year, 4 shophouses in Rail Mall at Upper Bukit Timah was sold for $63.2 million.