Investments into niche assets hit 10-year high to $1b

Average deals for shophouses, medical suites, and nursing homes are at $6m.

Singapore’s niche asset types are in the spotlight as investments in shophouses, medical suites, nursing homes, carparks, dormitories, and petrol station sites have achieved a 10-year high of more than 40 deals amounting to a total of $1b in 2018, CBRE Research revealed. Investors that have been lured to the asset type includes fund and family offices.

“With a median deal size of $6m, this is palatable for a large spectrum of investors,” the research firm noted.

Also read: Foreign players injected $8.11b into Singapore real estate in 2018

In particular, CBRE Research said that shophouses would appear to be luring amongst investors as they are exempted from foreign investment restrictions and the Additional Buyers’ Stamp Duty which mainly affects residential investments.

Shophouses have also been eyed by High Net Worth Individuals (HNWI) due to their prime locations, heritage charm, and scarcity, Steven Tan, Colliers International director of capital markets & investment services said in a previous interview.

Also read: Singapore's ultra wealthy lured to shophouses despite lower yields

“There is also more flexibility in terms of operating hours and layout of the interior, compared to a cookie cutter space within a mall or office building. They are seen to be a quality asset that offers landlords stable and strong capital appreciation,” he said.

Tan noted that despite working alongside the conservation guidelines for shophouses, investors find restoration rewarding as leasing prospects for shophouses in good location tend to be strong due to their ability to provide tenants with cheaper premises compared with strata units in large malls or office towers in the city.

“Over the long-term, we think prices of shophouses tend to be more resilient and are somewhat more immune to the volatility of the market due to their limited supply and historical value,” Colliers International research director and head Tricia Song said in a previous interview.

Also read: Nine precincts join business improvement district programme

According to CBRE, the Business Improvement District programme led by the Urban Redevelopment Authority (URA) will benefit key areas such as Kampong Glam and China Place where key stakeholders include shophouse investors and business operators.