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Sales of shop houses in the first half of 2011 dropped 19 percent from H2 2010, according to the latest Knight Frank report.
The real estate firm revealed that S$505.18 million worth of shop houses were sold in the first half, down from S$624.21 million in the second half of last year.
Transactional activity declined across all price brackets. It noted that the decline was due to owners’ high asking prices and the limited availability of conservation shop houses for sale. The high asking prices also reduced the rental yields, making the properties less appealing to investors.
“Latest data analysis and market feedback indicate that shop house investments have lost their appeal relative to strata shops as affordability, rental yield and supply are issues,” said Knight Frank.
“For investors who want to have a piece of action in the retail trade at a lower price quantum or a decent rental yield of four to five percent, strata shops may be a better investment choice.”
Meanwhile, the total value of strata shop sales declined by eight percent, from S$268.75 million in the second half of 2010 to S$246.75 million in the first half this year.
Going forward, Knight Frank noted that in the shop house segment, it anticipates buyers to remain resistant to the high price expectations of sellers. Funds may be eager to invest in shop houses but will normally look for large investments comprising a number of shop houses that cannot be provided by individual owners.
Strata shop sales, on the other hand, will continue to be dynamic, as long as economic performance for 2011 remains strong and tourist arrivals continue to increase, said Knight Frank.
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