Shop house sales fall 25%

Blame it on the steep 34% increase in unit prices.

According to Knight Frank, a total of 132 shop houses were transacted in 1H/2012, a 25% decrease in transaction volume as compared with 1H/2011. Overall value of total shop house sales reached $674.6 million, a 5% increase from 1H/2011. Unit prices increased by 34% in 1H/2012 to $2,804psf as compared with 1H/2011, a record high since 1995.

Here's more from Knight Frank:

The decrease in transaction volume is attributed by the steep increase in prices, resulting in shop houses exceeding the affordability threshold for many first-time prospective buyers. Despite record high prices, strata shop houses are viewed as attractive investment assets.

Cash rich investors are purchasing multiple units in single transactions. 42 multiple-unit transactions totalling $327.8 million in value accounted for 49% of total transaction value for 1H/2012. For instance, six adjoining shop houses located at Syed Alwi Road were sold for $23 million to a single purchaser. Hot spots for 1H/2012 were shop houses mainly located in districts 1, 2 and 8, i.e. Tanjong Pagar, Chinatown and Little India areas.

For instance, a 1,087 sq ft shop house at Duxton Road was transacted at $3,509psf in April 2011. In March 2012, the same shop house transacted at $4,063psf, representing a 16% capital gain within 11 months. Companies and local buyers comprise 90% of shop house buyers and 10% being foreign buyers. The bulk of shop house transactions are in the range of $2 million to $5 million (representing 62% of 1H/2012 transactions).