Bookmark & Share
Shophouses see continued interest from family offices, foreign buyers and institutional funds during the first quarter of 2021.
After witnessing a strong burst of buying activity at the end-2020, shophouses see continued interest from family offices, foreign buyers and institutional funds during the first quarter of 2021, reported Channel News Asia (CNA).
Data recorded on 6 April showed that there were 51 deals for shophouses in Q1 2021 totalling $328.3 million.
While the figure is lower than the 57 sales totalling $462.8 million registered in Q4 2020, analysts said it is a good indication of stable demand.
Knight Frank said sales in Q4 2020 surpassed pre-pandemic levels, on the back of pent-up demand, high liquidity in the market and lower costs of borrowing.
Recommended read: Guide to Buying Commercial Property in Singapore
For this year, CBRE’s Senior Director of Capital Markets Clemence Lee believes investors will remain keen on investing in shophouses, which are considered as defensive assets that retain value even during a downturn.
He noted that interest from buyers coming from Malaysia, Hong Kong and China has been “growing strong”, after picking up in the middle of 2020.
Several notable recent transactions by foreigners include a $15.7 million deal for 81 South Bridge Road and a $21.5 million sale for 22 and 23 Mosque Street.
“In addition to the allure of shophouses as a defensive asset type which offers stability in uncertain times, the strong and stable Singapore currency is also one of their major considerations, of which investing in shophouses in Singapore will act as a hedge against currency risks in their home country,” said Lee as quoted by CNA.
“Foreign buyers also seek shophouses, as this asset offers them capital preservation and appreciation,” he added.
Family offices, funds and co-living investors also contribute to demand, said Steven Tan, Colliers International’s Senior Director of Investment Services.
Family offices are private wealth management companies serving ultra-high-net-worth households.
“With the COVID-19 vaccine campaign and numbers of community cases under control, investors are optimistic of a medium- to long-term market outlook. Investors realise now it is a good time to invest before prices start to escalate,” said Tan as quoted by CNA.
Shophouses also offer foreign investors “an affordable entry point” since no Additional Buyer’s Stamp Duties (ABSD) are payable for their acquisition, said Tan.
Knight Frank Singapore Executive Director Mary Sai said investors are also encouraged by dropping vacancy rates amid the return of tenants and employees to the workplace, after the government eased COVID-19 rules at the workplace.
Looking ahead, shophouses located within the Central Business District are expected to remain the most popular, said experts.
Nonetheless, Lee shared that city fringe shophouses, such as those found in Geylang, Jalan Besar and Joo Chiat, has been receiving growing interest due to the pandemic.
“Suburban shophouses are typically more defensive as they cater predominately to the surrounding neighbourhood,” he said.
“With more companies adopting hybrid working models going forward, there are high possibilities that people will visit the shops in the neighbourhood centres on days when they work from home, driving higher footfall to businesses housed in these shophouses.”
Unlike those situated in downtown areas, shophouses within the city-fringe areas also require smaller investment amounts and provide slightly higher yields, making them attractive to family offices looking to diversify during this period.
Looking for a property in Singapore? Visit PropertyGuru’s Listings, Project Reviews and Guides.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: victorkang@propertyguru.com.sg
Related Articles:
Two Kampong Glam shophouses on sale for $11.55mil
Two city fringe shophouses up for sale
Rising wealth hub to drive demand for shophouses, strata offices