The Unique Appeal of Conservation Shophouses
Singapore’s conservation shophouses are celebrated for their architectural charm and rich heritage. These properties, a blend of cultural significance and historical value, represent a unique segment of the real estate market. With their scarcity in supply, shophouses have become a coveted investment asset, particularly for those seeking exclusive properties with a story to tell.
Lower Investment Quantum and Resilient Market Fundamentals
One of the key advantages of conservation shophouses is their comparatively lower investment quantum. Unlike larger commercial properties, shophouses offer investors an entry point into prime real estate at a manageable scale. This accessibility, combined with their mixed-use potential—spanning residential, retail, and office purposes—has cemented their reputation as a sound investment option.
Shophouses also offer versatile usage options such as retail, office, and even residential. In recent years, investors have converted shophouses to F&B and co-living spaces or hotels. This flexibility offers owners opportunities to adapt the property to their or tenants needs and optimize its value.
Moreover, the fundamentals of this market remain strong. The enduring appeal of shophouses is supported by stable rental demand and their strategic locations within Singapore’s cityscape. These factors collectively ensure a steady income stream and potential for long-term appreciation.
Read also: Investing in a Piece of Singapore’s History: Shophouses Explained
Shophouse Sale Trends
The shophouse market was active in 2024. Much of the improved sentiments in the shophouse market is due to the sale of the shophouses that were seized in the money laundering probe. These shophouses were understood to have attracted strong interest and were sold. Foreign investors also switched their focus to shophouses after the Government raised the ABSD on residential properties to 60%.
| Address | Land Area (sqft) | Price | Tenure |
|---|---|---|---|
| 490, 492, 494 North Bridge Road | 4,853 | $72 mil | 999-year |
| 70, 71, 72 Duxton Road | 3,239 | $45 to $50 mil | 99-year |
| 496 North Bridge Road | 2,157 | $42 mil | 999-year |
| 96 Amoy Street | 2,082 | $22 to $26 mil | 999-year |
| 112, 114 Telok Ayer Street | 1,770 | $20 mil | 999-year |
We estimate there were 74 shophouse transactions in 2024, down from 133 in 2023. Similarly, the total value of transactions declined by the same proportion to $608 million in 2024, from $1,194 million in 2023. The average deal size was $8.2 million in 2024, slightly lower than the average $9 million in 2023.
Shophouse Rental Trends
Shophouse rents held steady from 2014 to 2019. While median rents fell in 2020 due to COVID-19, rents started recovering in 2021 as demand for office spaces returned and retailers increasingly sought shophouse locations. The ever-evolving retail landscape post-pandemic saw more retailers and F&B brands looking to offer consumers a different experience from malls.
We estimate there were 3,600 leasing transactions for shophouses in 2024, similar to the level in 2023. Median rents are around $6.50 psf per month, slightly higher than 2023. While CBD and non-CBD shophouses are both witnessing record median rents, CBD assets command a premium of 20-38% over the non-CBD ones due to their prime location.
Market Outlook: Transaction Volumes Poised for Recovery
Recent market trends indicate a potential recovery in transaction volumes for conservation shophouses. While fluctuations in activity have occurred, investor confidence remains robust. The combination of consistent rental yields and renewed interest from both local and foreign buyers suggests a bright outlook for this unique asset class.
Challenges of Conservation and Maintenance
Investing in conservation shophouses, however, comes with its own set of challenges. Due to their protected status, these properties require careful restoration and maintenance to preserve their historical integrity. Renovation costs can be substantial, and compliance with stringent regulations is essential. Prospective investors must factor these considerations into their decision-making process to avoid unforeseen expenses.
Strategic Recommendations for Investors
For those looking to invest in conservation shophouses, a strategic approach is essential:
- Understand Regulatory Requirements: Familiarize yourself with the guidelines governing conservation properties to ensure compliance and avoid penalties.
- Assess Property Condition: Conduct thorough inspections to evaluate the state of the property and estimate potential renovation costs.
- Leverage Professional Expertise: Partner with experienced realtors and consultants who specialize in shophouse transactions to navigate the complexities of this niche market.
Conclusion
The Singapore conservation shophouse market offers a unique and rewarding opportunity for discerning investors. While challenges such as maintenance costs and regulatory compliance exist, the potential for stable returns and value appreciation make these properties a compelling choice. With a strategic approach and the right professional support, investors can unlock the full potential of these timeless architectural treasures.
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