Commercial shophouse sales in Singapore continued to witness a moderation in 1Q2023 amid high interest rates and general cautious sentiment. Referring to caveat data, only 28 shophouses were sold in 1Q2023. This was lower than the 35 deals recorded in 4Q2022 and the volume of transactions was down by 46% on a y-o-y basis. With the lower number of sales, the transaction value of shophouse deals stood at $278 million in 1Q2023. Of the 28 deals, more than 80% were priced above $5 million.

Amid the high interest rates, commercial shophouse sales in Singapore moderated in 1Q2023, according to a 1Q2023 report by PropNex Research. A total of 28 shophouses were sold for a transaction value of $278 million, which was lower than the 35 deals recorded in 4Q2022 and 46% lower than the volume of deals recorded in 1Q2022.

Most of the shophouse deals in 1Q2023 were for freehold properties and more than 80% of the transactions were for properties priced above $5 million. District 8, comprising of the Little India and Jalan Besar areas, recorded the highest number of shophouse sales with seven units sold for a total transaction value of $113 million.

On the unit price on land area, growth was uneven across districts when compared to 4Q2022. Furthermore, some transactions, particularly those in Districts 1 and 2, were not caveated as they were done with foreigners and entities.

The J’Den Condo project by J’Den Condo Capitaland Development will replace the former JCUBE mall with a 40-storey residential and commercial development, estimated to be completed by 2027. It will be connected to the Jurong East interchange and other amenities, and launch in the second half of 2023.

For freehold and 999-year leasehold shophouses in Districts 1 and 2, the average unit price on land area fell by 20% q-o-q, while Districts 7 and 8 saw an 8% increase in psf prices on land area. In contrast, the average unit price of 99-year leasehold shophouses in Districts 1 and 2 fell by 16% in 1Q2023.

The shophouse rental sector also remained buoyant with 886 rental contracts signed in 1Q2023, resulting in a record-high total rent value of $9.54 million.

Going forward, PropNex expects interest in commercial shophouses to remain elevated, albeit temparately so due to high borrowing costs and firm prices impacting net yields. Prices are however expected to remain resilient given the limited stock of shophouses and healthy demand. Shophouse rents are furthermore expected to rise further in 2023 due to the recovery of the tourism and retail industries, as well as the limited availability of shophouse spaces for rent.