Singapore shophouse sales sink 35.6% in H2 2022

Jan 25, 2023

SHOPHOUSE sales in Singapore dwindled to some S$625.6 million in the second half of 2022, down 35.6 per cent from the first half in the same year as investors turned wary amid interest rate hikes.

This is also a 38.7 per cent year-on-year decrease and a stark contrast from the “record-breaking performance” posted every six months between H1 2021 and H1 2022, said Knight Frank in a market update on Wednesday (Jan 25).

In terms of volume, the half-year saw 67 transactions, with freehold shophouse sales accounting for the bulk at 80.6 per cent or 54 transactions.

Combined with the 114 transactions in H1 2022, the full year saw 187 transactions for a total value of S$1.6 billion – a reversal from 2021’s peak of S$1.9 billion.

“As interest rates surpassed the yield from recurring shophouse income, institutional investors began to shy away from the asset class,” noted Knight Frank.

Likewise, leasehold shophouses saw a dip in sales volume to just 13 transactions amounting to S$155.3 million in H2 2022, down 34.6 per cent from the S$237.6 million recorded in the first half of the year and almost two-thirds of H2 2021’s S$242.2 million.

Meanwhile, the average unit price for leasehold shophouses was S$4,275 per square foot (psf) on land in H2 2022, about a 17 per cent decrease from the previous half-year, while the unit price for freehold shophouse averaged to S$4,802 psf on land.

Despite the general slowdown in sales activity, Knight Frank pointed out that District 8 remained a hotspot for buyers, with 26 transactions amounting to S$182.5 million in H2 2022.

This is markedly different from every other district, which recorded fewer than 10 transactions each during the same period, said the consultancy.

A notable sale in District 8 is a shophouse unit at 35 Rowell Road, which was sold for S$4.9 million in October 2022 – around 21 per cent higher than the preceding sale just three months back in June for just under S$4.1 million.

Knight Frank credited buyers’ interest in the area to tourist activity in the city fringe and the consequent gentrification of these areas. This makes for more affordable prices when compared to that in Districts 1 and 2, it said.



The biggest transaction for the six months was Lavender Place at 161 Lavender Street – which consists of a row of 11 shophouses – bought by tile specialist Hafary Holdings for S$71.3 million.

On a psf basis, the most expensive transaction was 11 Bali Lane in the Kampong Glam Conservation Area, which sold for S$23 million, or S$13,821 psf on land.

Knight Frank believes that there will be sustained demand for shophouses from private sources of wealth, including high-net-worth investors and family offices, as travel demand rebounds and China’s travel restrictions ease.

Still, the consultancy highlighted that buyers are “becoming increasingly cognisant that holding the asset over a longer investment horizon very probably leads to exponential price appreciation”. Some prospective sellers therefore dropped out of the market, it said, particularly after the high volume of transactions in the past two years.



For instance, the most profitable deal in H2 2022 was for a 724 sq ft shophouse unit at 31 Bussorah Street in the Kampong Glam Conservation Area, which sold for S$3.5 million in October 2022. The seller had held onto it for around 20 years, making a total profit of 900 per cent.

This was followed by a 911 sq ft unit at 82 Dunlop Street in the Little India Conservation Area, which sold for S$4.1 million in July 2022. The seller had bought it around 20 years prior and made a total profit of 478.6 per cent.

“Given the growing cautious climate, the shophouse market is not likely to achieve the levels of (2021 and 2022),” added Knight Frank, “but instead, a more moderate range from S$1.3 billion to S$1.5 billion of sales in 2023 would be more realistic.”

https://www.businesstimes.com.sg/pro...nk-356-h2-2022