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A total of 118 transactions were posted in H1 2021, surpassing the 90 deals seen in H2 2020 as well as the last recent high of 99 transactions in H1 2018.
Singapore saw total shophouse transaction value increase 29.9% to $836.1 million in H1 2021 from 2H 2020, on the back of a pick-up in activity from Q4 2020, revealed a Knight Frank report.
The H1 2021 figure includes the transaction values for the first and second quarters, which stand at $365.4 million and $470.7 million, respectively.
A total of 118 transactions were posted in H1 2021, surpassing the 90 deals seen in H2 2020 as well as the last recent high of 99 transactions in H1 2018.
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Although freehold shophouses still accounted for the bulk of transactions during the period under review at 78.8%, sales volume for leasehold shophouses more than doubled to 25 units from H2 2020.
“Buyers who were drawn by hopes of capital appreciation showed interest in better-located leasehold shophouses, with over half of the leasehold transactions located at the prime District 2 (Anson, Tanjong Pagar),” said Knight Frank.
District 8 registered the highest sales volume, making up over one-fifth of shophouse transactions at 26 units – reflecting initial signs of a shifting interest to fringe area shophouses.
The District 8 shophouses were acquired at an average price of $4.2 million. Specifically, 18 of the 26 units were sold at entry prices below $5 million.
Meanwhile, shophouses in District 15 were sold at an average price of below $4.5 million.
Shophouses within traditionally favoured areas continued to be sought after, with District 1 posting 15 transactions, while District 2 recorded 20 transactions in H1 2021.
“Many of the shophouses sold featured main street frontages and operated as F&B businesses such as in Tras Street, and sold at $11.5 million on average,” said Knight Frank.
Prices for freehold shophouses marginally declined by 0.4% from 2H 2020 to an average of $4,344 per sq ft (psf) on land in H1 2020. On an annual basis, however, prices jumped 59.5%.
On the other hand, average prices for leasehold shophouses increased 4.9% from H2 2020 to $4,418 psf on land, and 23% over the same period last year.
In H1 2021, around 56.8% of the shophouses sold were priced above $5 million, higher than the 42.2% in H2 2020.
Knight Frank noted that the top five deals by price quantum were recorded “in Districts 1 and 2, where top price premiums need to be offered to prise these assets from sellers”.
In fact, a fully tenanted three-storey conservation shophouse with an attic at 91 Tanjong Pagar Road was sold at over five times its previous sale price, while a shophouse at 13 Ann Siang Road was transacted for $9.3 million, or up 9.2% from its previous sale price.
Looking ahead, Knight Frank expects shophouse sales value for this year to exceed the previous high of $1.46 billion in 2018, with sales volume breaching the 200 unit mark.
“Buyers exhibited a continued appetite for shophouse assets in the first half of 2021,” it said.
“2020 might have been characterised by the pandemic and recession, but this does not diminish the fact that in just the first six months of 2021, the total transaction value was already 91.6% of the full year 2020 while the number of units transacted accounted for 81.4% of last year’s total.”
And with many keen on testing the market “on the offers they can draw, we might see shophouse sales in the second half of the year achieving new benchmark prices”, added Knight Frank.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: victorkang@propertyguru.com.sg
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