2023-01-25-莱坊-Singapore_Shophouse_Market_Update_H2_2022_2页_682kb

Shophouse Market Summary: H2 2022

Core Content

The Singapore shophouse market experienced a shift in sentiment during the second half of 2022 (H2 2022), with investment activity becoming more cautious compared to the previous year. While the market continued to attract interest, transaction volumes and values declined significantly from the strong performance in H1 2022.

Key Market Trends

• Transaction Activity:

  • A total of 67 shophouses were sold in H2 2022 for S$625.2 million, marking a 35.6% decline in transaction value compared to the previous half-year and a 38.7% year-on-year drop.
  • For the entire year of 2022, there were 187 shophouse transactions with a total value of S$1.6 billion, with most activity concentrated in the first half of the year.

• Investor Behavior:

  • The surge in interest rates led to a dampening of demand, as institutional investors found the returns from shophouses less attractive.
  • Private wealth such as family offices and individuals became more prominent buyers, focusing on strategic locations and value-enhancing strategies like refurbishment and changing tenancy types to attract trendy occupiers.

• Freehold vs. Leasehold Sales:

  • 80.6% of H2 2022 shophouse sales were freehold, with a total value of S$469.9 million and an average price of S$4,802 psf.
  • Leasehold sales totaled S$155.3 million with an average price of S$4,275 psf, a 34.6% drop from H1 2022.

Notable Deals in H2 2022

• Lavender Street: Hafary Holdings acquired 11 shophouses for S$71.3 million, planning to establish a new flagship store.
• Jalan Besar: 8M Real Estate purchased a row of five conservation shophouses for S$40 million, one of the top five deals in H2 2022.
• 35 Rowell Road: A single shophouse unit was sold for S$4.9 million in October 2022, a 21.0% increase from the previous sale in June.
• Kampong Glam Conservation Area: A unit sold for S$3.5 million in October 2022 achieved a 900.0% return after being held for 20 years.

Market Outlook for 2023

• The shophouse market is expected to see a moderate slowdown in transaction activity in 2023, with a more realistic sales value range of S$1.3 billion to S$1.5 billion.
• District 8 remains a key area for investment due to its tourist activity and gentrification trends, offering more affordable entry points compared to Districts 1 and 2.
• Investors are advised to consider long-term holding as a strategy for exponential price appreciation.

Contact Information

• For Strata Sales Enquiries:

  • Mary Sai, Executive Director, Capital Markets
  • Email: mary.sai@sg.knightfrank.com
  • Phone: +65 6228 6886

• For Further Information on the Report:

  • Leonard Tay, Head of Research
  • Email: leonard.tay@sg.knightfrank.com
  • Phone: +65 6228 6854

Recent Publications

• SHOPHOUSE H1 2022
• THE WEALTH REPORT 2022

Subscribers are encouraged to stay updated by subscribing for future reports.

About Knight Frank Singapore

Knight Frank is a leading global property consultancy, with 384 offices in 51 territories and over 16,000 employees. It provides services to individuals, developers, investors, and corporate tenants. In Singapore, the firm operates through its head office and two subsidiaries: Knight Frank Property Asset Management and KF Property Network.

Disclaimer

This report is for general information only. Knight Frank Research and Knight Frank do not accept legal responsibility for any loss or damage arising from the content. Reproduction is allowed with proper attribution to Knight Frank Research.