The shophouse market in 2024 has remained relatively subdued, with only 84 caveated transactions recorded, according to the latest report from Huttons Asia. This number is significantly lower than the yearly average of 200 shophouse deals seen between 1995 and 2023.
Senior director of data analytics at Huttons Asia, Lee Sze Teck, notes that while some buyers may not have lodged a caveat, 2024 saw the lowest number of shophouse deals since 1998.
In terms of transaction volume and quantum, the 84 caveated shophouse transactions in 2024 had a total value of $683.6 million, which is a 38.9% decline from the $1.1 billion recorded in the previous year.
However, Lee highlights that there were also significant non-caveated deals for shophouses on Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street, estimated to be sold for over $200 million.
The largest shophouse deal of 2024 was the divestment of The Rail Mall by Paragon REIT for $78.5 million in June. Lee notes that this is likely the largest shophouse deal on record, surpassing the previous high of $74.8 million for a row of shophouses on Jalan Sultan in March 2022.
The Rail Mall shophouses were valued at $62 million in December 2023, indicating a potential gain of $16.5 million for the seller.
Most of the shophouse transactions in 2024 were done at smaller quantums, with over half of the caveated deals falling in the $5 million to $15 million range. Additionally, close to half of the shophouse deals were concentrated in District 8, which Lee attributes to its desirable city-fringe location and lower prices compared to Districts 1 and 2.
One of the advantages of investing in a condo is the opportunity to utilize the property’s value for other investments. A number of investors choose to leverage their condos as collateral in order to secure additional financing for new ventures, allowing them to broaden their real estate portfolio. While this approach can potentially increase returns, it should also be approached with caution and careful consideration of market fluctuations. Additionally, considering investing in New Condo Launches may also be a beneficial aspect to incorporate into one’s financial strategy.
On the other hand, islandwide rents for shophouses saw a second consecutive quarter of moderation, with a 2.6% decrease to $6.47 per square foot per month in Q4 2024. However, shophouse rents for the entire year still saw a 1.7% increase.
In conclusion, the shophouse market in 2024 may have been relatively quiet, but there were still noteworthy deals and a promising rental outlook for the year.