Number of shophouses sold in Q2 likely at 5-year low

The number of shophouses sold in the second quarter of 2014 will be the lowest in over five years, said property analysts.

According to caveats lodged, there were just 18 transactions between April and June.

Analysts said this is the lowest number since the fourth quarter of 2008, when 23 transactions took place.

Sales have slowed in the past year as a result of the implementation of the total debt servicing ratio frame work last June.

Colliers International said transaction volume has halved from 76 in the second quarter of 2013 to 30 in the following quarter.

But weaker sales has had limited impact on their prices.

Currently, the average price of shophouses in the central business district is around S$6-7 million. Those outside the city go for around S$3.5-5 million.

Grace Ng, deputy managing director at Colliers International, said: “The median sales price has maintained at more or less above S$3,000 per square foot over the land area as the owners of these shophouses have deep pockets, they have strong holding power and they will not sell if they don’t achieve the target prices.”

Colliers said generally shophouses enjoy a rental yield of 1-5 per cent, slightly higher than residential properties, at between 1-4 per cent.

In the last quarter, Squarefoot Research said the top three areas with the highest median transacted prices per square foot were Outram, Singapore River and Bukit Merah.

Analysts added that the outlook for the shophouse market in Singapore should be fairly stable.

Esther Hoon, analyst at Squarefoot Research, said: “It has its own unique charm, they are usually well-located in the central region and the excellent frontage, which is very rare, and they offer a greater flexibility in terms of usage, which cannot be found in other types of commercial properties.”

There are over 6,500 conserved shophouses in Singapore and they are being used as retail shops, restaurants, hotels and residences.

Source : Channel NewsAsia – 7 Jul 2014

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