Sale of shophouses tied to money laundering probe revives market

The shophouse market saw a 31.3% QoQ increase in sales.

The Singapore Police Force's initiation of the process to sell shophouses linked to the money laundering probe may have revived market interest.

"The clarity over the process and prices brought buyers back to the market. There was much buzz
and that injected confidence in the shophouse market," Huttons said in a report.

In 1Q24,  the shophouse market saw a 31.3% QoQ increase in sales. Year-on-year, however, sales were 34.4% lower.

Apart from volume, the value of transactions also rose by 62.3% QoQ to $180.3m.

Shophouses that exchanged hands in 1Q24 were sold at an average price of $8.6m, close to the pre-money laundering probe price level of around $9.0m, according to Huttons.

District 8 was the most popular market, accounting for almost half of the transactions. The quantum of deals in the market ranged from $4.9m to $14.4m.

Meanwhile, Districts 1 and 2 saw a return of buying interest following a quiet quarter in 4Q23.

"Buyers paid between $9.5 and $19.0 million for the shophouses in Districts 1 and 2 in the first quarter of 2024," Huttons reported.

"Investors continued to acquire 999-year leasehold and freehold shophouses for wealth
preservation," Huttons added.

District 1 hosted the largest 1Q24 transaction, a freehold shophouse on Pagoda Street sold for $19.0m.

"The seller made an estimated $2.75m after holding it for around five years," Huttons reported.

In the coming quarters, Huttons believes the shophouse market will see steady investor interest.

"The rarity of shophouses, the lower barrier to entry for foreign investors compared to the residential market and the potential for capital appreciation will support prices in the market," Huttons said.