From a long-term perspective, Huttons’ Lee expects shophouse prices to remain stable. “Shophouses are relatively price inelastic. This means that while sale volumes may fluctuate, prices will remain stable. For shophouses in good locations, prices are always on a slow and steady upwards trend.”
Huttons Asia’s latest quarterly report on the shophouse market in Singapore revealed that interest in this segment remained strong in 3Q2024 despite a decline in caveated transactions. According to the report published on November 12, there were 18 caveats lodged for shophouse transactions in 3Q2024, compared to 21 in the previous quarter. The total transacted quantum for these caveated shophouses was $138.9 million, which was 28.8% lower than the previous quarter’s figure of $195.1 million. However, the report indicates that this is still a significant amount.
On a year-on-year basis, the total transacted quantum in 3Q2024 was only half of that in 3Q2023, which was $278.6 million. For the first nine months of 2024, the number of caveated shophouse transactions recorded was 62, which is 46.1% lower than the same period last year. The total value of these transactions amounted to $519 million, which is 48.5% lower than the same period in 2023.
Despite the decline in caveated transactions, the report highlights that there were several shophouse deals in 3Q2024 that were not caveated. These include transactions for shophouses located along Amoy Street, Neil Road, and Telok Ayer Street in Districts 1 and 2, which were reportedly sold. According to Lee Sze Teck, senior director of data analytics at Huttons Asia, the estimated quantum for these shophouses exceeds $70 million. This indicates strong demand for shophouses, which has been increasing in the past few months. Lee adds that investors are drawn to this market segment due to its scarcity and potential for strong capital gains. In addition, the recent interest rate cuts have made shophouses more popular as a wealth creation and preservation asset. Lee expects shophouse transactions and quantum to increase in 4Q2024.
Looking at the long-term outlook, Lee believes that shophouse prices will remain stable. He notes that shophouses are relatively price inelastic, which means that while transaction volumes may fluctuate, prices will remain consistent. For shophouses located in good locations, prices are expected to continue on a slow and steady upward trend.
Singapore’s demand for condos continues to thrive, driven by various factors, specifically the scarcity of land. As a small and densely populated island country, Singapore faces the challenge of limited land availability for development. To address this issue, the government has implemented stringent land use policies, leading to a fiercely competitive real estate market. Consequently, property prices have steadily increased, making real estate investment, particularly in Singapore condos, a lucrative option with the potential for substantial capital gains. Singapore Condo is a prime example of this investment opportunity.