Singapore’s shophouse transaction value up 29.9% in H1 2021

Updated from : The Business Times, 9 July 2021

SINGAPORE’S total shophouse transaction value hit S$836.1 million in H1 2021, up 29.9 per cent from H2 2020, backed by the pick-up in activity from the fourth quarter of 2020.

This total was made up of the first and second quarter’s transaction values of S$365.4 million and S$470.7 million respectively. In terms of volume, the half-year saw 118 sales, up from the 90 in H2 2020.

While freehold shophouses still accounted for the bulk of transactions – 78.8 per cent – leasehold sales volume more than doubled from the previous half year to 25 units.

Knight Frank said on Thursday: “Buyers who were drawn by hopes of capital appreciation showed interest in better-located leasehold shophouses, with over half of the leasehold transactions located at prime District 2.”

Top of Form

The report also noted a trend towards more “affordable alternatives”. District 8 recorded the highest sales volume among the regions, with 18 out of the 26 sold at “entry prices” of below S$5 million.

However, the typically-favoured Districts 1 and 2 remained sought-after, recording 15 and 20 transactions respectively.

The average unit price of freehold shophouses during the half year dipped 0.4 per cent from that of H2 2020, to S$4,344 per square feet (psf) on land. This is 59.5 per cent higher from H1 2020, when Singapore was experiencing the onset of the pandemic.

Meanwhile, leasehold prices reached S$4,418 psf on land, up 4.9 per cent from the previous half-year and 23 per cent from the year ago. The rise came on the back of transactions in the Tanjong Pagar and Kreta Ayer Conservation Areas fetching higher prices.

The biggest transaction for the six months was 277/279 New Bridge Road, which sold for S$28 million or S$11,018 psf. On a psf basis, the most expensive transaction was 9 Stanley Street in the Telok Ayer Conservation Area, which sold for S$17.8 million or S$12,607 psf.

A fully tenanted three-storey conservation shophouse with an attic at 91 Tanjong Pagar Road obtained the highest gain during the half year: it was sold at S$10.5 million, more than five times the previous sale price some 15 years ago.

Knight Frank said that buyers exhibited a “continued appetite” for shophouse assets in the first half of 2021. The real-estate consultancy firm noted that the half year’s transaction value was equivalent to 91.6 per cent of that in the full year of 2020.

“Barring any recurring waves of the Covid-19 infection and based on the current demand momentum, it is more than possible for the sales value in the full year of 2021 to exceed the last S$1.46 billion high posted in 2018, and for sales volume to cross the 200-unit mark,” said Knight Frank.

“In addition, with many still keen to test the market on the offers they can draw, we might see shophouse sales in the second half of the year achieving new benchmark prices,” it added.

That said, the company also noted that there is an “inevitable ceiling” to the escalating prices.