PropNex Research Q2 2022 Shophouse
Property Report

Overview
The commercial shophouse market continued
to buzz in Q2 2022, with various properties –
including in Chinatown, Little India, Balestier and
Geylang – being put on the market. URA Realis
caveat data showed that more than 60 deals
were transacted in the quarter, though the
number of deals is likely to be come in higher as
several transactions have not been captured,
including the sale of Hotel Soloha on Teck Lim
Road for more than $53 million.
Sales and rental activity in the shophouse market
remained healthy during the quarter on firm
demand from occupiers looking to expand and
leveraging on the reopening of the economy, as
well as investors seeking assets that pose
relatively lower risk and have the potential to
capitalise on positive leasing and rental outlook
as the economy reopens.

Sales Transactions in Q2 2022
Based on caveats lodged, there were 64
shophouses transactions in Q2 2022, up by 23%
from the 52 deals in Q1 2022. Most of the deals
done during the quarter were small
transactions occurring in the fringe areas such
as District 8.

Although URA Realis caveats data showed that
64 shophouse deals were done in Q1 2022, the
figure is likely to be higher as some caveats
were not lodged by buyers. Based on caveated
data, 116 deals were done in the first half of 2022,
falling short of the 130 deals done in 1H of 2021.
The transaction value of deals during Q2 stood
at $481 million, which is a 2.9% increase from the
previous quarter. Year-on-year, the value of
transactions in Q2 is down by 9.4% owing to the
higher base recorded in Q2 2021, where $531
million worth of deals were done.
For the first half of 2022, deals worth $949 million
were achieved, surpassing the value recorded
in the first half of 2021 ($897 million).

Transaction Hotspots in Q2 2022

Of the 64 shophouse transactions in Q2 2022,
District 8 (Little India, Jalan Besar) posted the
highest sales at 34 units, accounting for
more than half of total transactions in the
quarter.
In terms of transaction value, District 8 led
the pack, achieving a whopping $218.3 million
worth of deals in Q2 2022. This quarter’s
performance is the district’s all-time high in
terms of sales volume and value, smashing
the last record in Q2 2013 where 29 deals
valued at $130 million were done.
Sales volume in the fringe areas such as
Jalan Besar and Geylang are expected to
remain elevated, due to their smaller price
tags and higher availability of units for sale.

Top 5 Shophouse Transactions in Q2 2022
The top deal of the quarter was the $53.38
million sale of Hotel Soloha along Teck Lim Road
– the sale was not reflected in the caveat data.
The bespoke boutique hotel consists of 3
adjoining shophouses, located in the Bukit
Pasoh conservation area. Based on the
purchase price, it reflects an estimated unit
price of $12,854 psf on land area.
Based on caveats lodged, the top transaction
of the Q2 2022 was the $28 million sale of a pair
of conservation freehold shophouses along
Jalan Besar in the Petain Road and Tyrwhitt
Road conservation area – reflecting a unit price
of $3,267 psf on land area.
Another notable deal in the quarter was for the
sale of 5 adjoining shophouses along Club
Street for nearly $26 million, which reflects a unit
price of $7,276 psf on land area.

Shophouse Prices
In terms of unit prices on land area ($psf),
shophouse values in the city have softened in
Q2 compared to Q1, though prices have largely
grown from the previous year.
The weaker average unit prices especially
for shophouses in D1/D2 were largely due to
the thin sales volume and the physical
attributes of the shophouses that were sold
during the quarter – skewing average unit
prices.

The average transacted unit price on land
area* of freehold and 999-year leasehold
shophouses in D1/D2 and D7/D8 contracted in
Q2 2022, with that of D1/D2 posting a steeper
21.9% QOQ drop. On the other hand, freehold
and 999-year leasehold shophouses located in
D14/D15 and the rest of Singapore grew by
about 59% QOQ.
Meanwhile, 99-year leasehold shophouses in
D1/D2 saw the average unit price on land area
in Q2 2022 fall by 6.9% QOQ, while that of D7/D8
slipped by 2.5% QOQ.
Despite figures indicating price weakness,
market observations suggest otherwise. A
number of owners have been withdrawing
their listings or tightly holding onto their
assets due to the scarcity of prime
shophouses – resulting in the lack of
transactions in these districts

Based on caveats lodged, of the 64 shophouses
sold in Q2 2022, close to half (45%) or 29 deals
were priced between $5 million and $10 million
– up from the 17 transacted in Q1 2022.

Rents
In Q2 2022, momentum in the shophouse
rental market remained brisk as the economy
reopened further and tourist arrivals picked up.
866 rental contracts were signed in Q2, slightly
down from the 898 contracts done in Q1. While
total rent values in Q2 mirrored that of Q1 with
$8.205 million worth of contracts signed.
Shophouse rentals grew steadily in Q2 2022,
with median rentals at $5.50 psf per month – up
from $5.37 psf per month in Q1 2022.
With the significant easing of travel
restrictions, occupier interest in shophouse
spaces located in tourist and nightlife
districts has grown substantially as foot
traffic return to these popular hotspots.

Market Outlook
Although Singapore does not expect a recession
or stagflation in 2023, there are still looming global
economic headwinds – as central banks globally
hike rates to manage decades-high inflation.
Hence, investors may be looking for assets that are
seen to be more defensive and have a proven
track record of riding out uncertain times.
Commercial shophouses, which are limited in
supply and prized for their heritage charm, will be
on investors’ radar for the rest of the year.
In addition, the reopening of international borders
and resumption of travel have led to a steady
rebound in the tourism industry, largely buoyed by
the pent-up demand for travel – which has largely
benefited shophouse properties in tourist spots.
The Singapore Tourism Board’s figures showed
that 543,732 visitors arrived in Singapore in June
2022, up from 418,458 in May – climbing for the 5th
consecutive month. With some major tourist
destinations in the Asia Pacific such as China,
South Korea and Japan lagging behind on relaxing
border restrictions, Singapore has been a
beneficiary of the pent-up international travel
demand. Tourist arrivals are expected to surpass 4
million visitors for the whole of 2022. Furthermore,
the return of more workers to offices will support
shophouse operators in the F&B and retail trade in
the city center.
Despite the upside potential, pricing expectations
and availability of suitable property for sale could
curtail transactions. Would-be investors may hold
off on the shophouse purchase if prices are
deemed too high, amid rising interest rates.