Shophouse transaction value drops 38.7% YoY to $625.2m  in H222

The surge in interest rates has dampened demand for the asset class.

With only 67 transactions, the shophouse market’s sales value dropped by 38.7% YoY to $625.2m in the second half of the year (H222).

Compared to the first half of 2022 (H122), transaction value was lower by 35.6%. 

Of the shophouses that exchanged hands in H22, 80.6% or 54 units were freehold, whilst 13 units were leasehold.

The sales volume of freehold shophouses in H222 amounted to $469.9m, whilst the leasehold segment’s total sales value was $$155.3m.

According to Knight Frank, the recent surge in interest rates has dampened demand for shophouses.

“With the recent surge in interest rates, demand has dampened. As interest rates surpassed the yield from recurring shophouse income, institutional investors began to shy away from the asset class. However, this leaves the road open to private wealth that is not as dependent on debt financing” the expert said.

“Family offices and individuals are expected to form the bulk of the purchasers, acquiring in strategic locations, adding value through refurbishment, changing up the tenancy types to trendy occupiers, and increasing rents, as private capital investors believe in the long-term forward-looking appreciation of shophouses in affluent Singapore.” the expert added.