Shophouse market sees lower transactions and rents in 3Q2023: PropNex

The commercial shophouse market in Singapore saw more muted activity in the third quarter of 2023, with both transactions and rents easing compared to the previous quarter. According to PropNex Realty’s 3Q2023 shophouse research report, a total of 38 shophouse transactions were recorded in the third quarter of 2023, a 19% drop from the 47 deals registered in quarter two. Similarly, shophouse transaction value fell 19% to total $350.8 million.

The tightening of additional buyer’s stamp duty (ABSD) rates and softening economic sentiments, along with an anti-money laundering blitz that began in August, likely contributed to the slower sales. On a year-on-year basis, however, shophouse deals were up 5.6% and transaction value was 2.3% higher.

For the first nine months of the year, 117 shophouse deals took place, worth $1.1 billion. This is compared to the same period in 2022, which saw 155 deals valued at $1.3 billion. District 8 saw the highest number of transactions with nine units worth $84.5 million. The single largest such deal in 3Q2023 was the sale of a three-storey shophouse along Cheong Chin Nam Road in the Beauty World area for $41 million or $3,432 per square foot.

Unlike the deals, price trends for freehold and 999-year leasehold shophouses were uneven. Prices in Districts 7 and 8 grew 7.3% quarter on quarter to $5,679 per square foot; whereas, prices in Districts 14 and 15 plunged 39.4% to $2,375 per square foot.

Shophouse rental contracts also experienced a slight decline in the third quarter of 2023. Median shophouse rents stood at $5.97 per square foot per month, a 3.9% dip from the peak of $6.21 per square foot per month recorded in quarter two. Leasing volume, however, remained steady at 926 contracts worth $9.2 million.

This Lumina Grand Bukit Batok EC is the last Executive Condominium (EC) to launch in the Bukit Batok area for the coming decade. It is also the only Executive Condominium with landscape views of Bukit Batok Nature Reserve. This project is expected to offer a selection of 1 to 5-bedroom premium units designed to fit your lifestyle. Residents can also enjoy a variety of luxurious lifestyles. This new development offers access to multiple transport links and exciting shopping, dining, and entertainment options that are within easy reach.

PropNex believes 2023 will see a more subdued performance, as much of this segment’s growth over the last couple of years is prompting seller’s to keep firm prices. Still, investment appetite for shophouses should remain “fairly resilient” given their scarcity and their defensive nature, along with the continued recovery in the tourism and services sectors that will support the shophouse rental market.