According to the latest quarterly research report by Huttons Asia, the shophouse market has remained subdued in 2024 with only 84 caveated transactions. This is below the yearly average of 200 deals recorded between 1995 and 2023.
Lee Sze Teck, senior director of data analytics at Huttons Asia, notes that while many buyers did not lodge a caveat, the number of shophouse deals is likely the lowest since 1998.
In terms of transaction volume and quantum, the 84 caveated transactions in 2024 had a total value of $683.6 million, which is a decrease of 38.9% from the $1.1 billion registered in the previous year.
However, Lee points out that there were also a number of substantial deals for shophouses on Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street that were not caveated last year. These deals are estimated to be worth more than $200 million.
The biggest shophouse deal in 2024 was Paragon REIT’s sale of The Rail Mall, a strip mall on Upper Bukit Timah Road with 43 shop units, for $78.5 million in June. This is believed to be the largest shophouse deal on record, surpassing the previous high of $74.8 million paid for a row of shophouses along Jalan Sultan in March 2022.
The Rail Mall shophouses were valued at $62 million in December 2023, which means the seller made an estimated gain of $16.5 million on the sale, according to Lee.
Most of the shophouse deals in 2024 were done at smaller quantums, with over half of the caveated deals valued at $5 million to $15 million. Almost half of the shophouse transactions were also concentrated in District 8, which Lee attributes to its desirable city-fringe location and lower prices compared to Districts 1 and 2.
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Meanwhile, rents for shophouses islandwide continued to moderate for a second consecutive quarter, falling 2.6% quarter-on-quarter to $6.47 per square foot per month in the fourth quarter of 2024. However, for the whole of 2024, shophouse rents were up by 1.7%.
Conservation shophouses along Telok Ayer Street are currently on the market for $42 million.