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The transactions of shophouses in terms of quantity and sales value have both plummeted in 2014 after the introduction of the Total Debt Servicing Ration in June 2013, according to media reports citing experts.
Based on URA data, 101 caveats have been lodged for shophouse deals so far this year totalling to S$548 million compared to 206 caveats totalling S$1.27 billion in 2013.
“Despite the decrease in the number of transactions compared with pre-TDSR, shophouse prices have remained resilient and in fact we are still observing an overall increase in capital values in choice locations,” said Sammi Lim, Associate Director for investment properties at CBRE.
Depending on land tenure, prevailing average prices in districts 1 and 2 at the central business district are within S$2,200 to S$2,500 per sq ft based on a unit’s gross floor area (GFA). Comparatively, the average prices ranged from S$1,800 to 2,200 per sq ft in May or June 2013.
Additionally, transacted prices of shophouses in Telok Ayer and Chinatown reached about S$2,500 per sq ft, exceeding Q1 2013’s price range of S$2,000 to S$2,100 per sq ft, noted Mary Sai, Knight Frank’s Executive Director for investment.
“Prices of conservation shophouses in the Central Area and Little India have held firm – defying our expectations of a price softening in the aftermath of TDSR and the Little India riot last December.”
“However, shophouse prices outside the Central Area in places such as Geylang, East Coast and Upper Serangoon have softened about five to 10 percent (post-TDSR),” she added.
Furthermore, several investors have achieved attractive gains from shophouses even after the TDSR was imposed. For instance, a unit in Peck Seah Street was purchased in March 2013 for S$12.2 million and resold for S$16.8 million in July 2013. It was subsequently flipped again in October of the same year for S$20.5 million.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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