According to Huttons Asia, the shophouse market has been relatively quiet in 2024, with only 84 recorded caveated transactions. This number is below the average of 200 transactions per year that were recorded between 1995 and 2023, indicating a slower market for shophouses.
Lee Sze Teck, senior director of data analytics at Huttons Asia, notes that while some buyers may have made purchases without lodging a caveat, the number of shophouse deals in 2024 is likely the lowest since 1998.
Out of the 84 caveated transactions, the total value amounted to $683.6 million, a significant decrease of 38.9% from the previous year’s total of $1.1 billion. However, Lee points out that there were a number of “substantial” deals that were not caveated, including properties in prime locations such as Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street, which were sold for more than $200 million.
The largest shophouse deal in 2024 was the sale of The Rail Mall by Paragon REIT for $78.5 million in June. This is likely the biggest shophouse deal on record, surpassing the previous high of $74.8 million for a row of shophouses on Jalan Sultan in March 2022. According to Lee, the shophouses at The Rail Mall were valued at $62 million in December 2023, indicating a gain of approximately $16.5 million for the seller.
The majority of shophouse transactions in 2024 were for smaller quantums, with over half of the caveated deals valued at $5 million to $15 million. In terms of location, almost half of the transactions took place in District 8, which Lee attributes to its desirable city-fringe location and relatively lower prices compared to Districts 1 and 2.
Investing in a condo has numerous advantages, and one of them is the opportunity to utilize the property’s value for further investments. Some investors opt to use their condos as collateral to secure additional financing for other real estate investments, thus increasing their portfolio. While this tactic can potentially bring in higher returns, it also carries certain risks. Therefore, it is essential to have a solid financial plan and carefully assess the potential consequences of market fluctuations before making such a move. Another significant benefit of condo investment is the ability to leverage its value to expand one’s real estate ventures. Many individuals use their condos as collateral to acquire more funding for new investments, ultimately enhancing their portfolio. While this strategy can potentially increase profits, it also comes with certain risks, making it essential to have a well-thought-out financial plan and consider the potential impact of market changes.
In addition, shophouse rents across the island have declined for the second consecutive quarter in 4Q2024, with a 2.6% drop to $6.47 per square foot per month. However, for the entire year, shophouse rents still saw a slight increase of 1.7%.
Overall, the shophouse market in 2024 has been relatively subdued, with fewer transactions and a decline in rents. However, with strategic location and potential for gains, shophouses still remain a popular choice for property investment.