The shophouse market has remained quiet in 2024, with only 84 caveated transactions, according to Huttons Asia. In their latest quarterly research report, the agency states that this number is below the average of 200 deals per year between 1995 and 2023.
“While many buyers did not submit caveats, the number of shophouse deals in 2024 is likely the lowest since 1998,” says Lee Sze Teck, senior director of data analytics at Huttons Asia.
In terms of volume and value, the 84 caveated transactions in 2024 had a total worth of $683.6 million, marking a decline of 38.9% from the $1.1 billion recorded in the previous year. However, Lee notes that there were also significant shophouse transactions that were not caveated in 2024, including properties on Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street estimated to have sold for over $200 million.
The largest shophouse transaction in 2024 was the sale of The Rail Mall by Paragon REIT for $78.5 million in June. This set a new record for the highest shophouse deal, surpassing the $74.8 million paid for a row of shophouses along Jalan Sultan in March 2022, according to Lee.
The Rail Mall shophouses were valued at $62 million in December 2023, resulting in an estimated gain of $16.5 million for the seller, he adds.
While most shophouse deals in 2024 were for smaller quantums, with over half of the caveated deals falling between $5 million and $15 million, almost half of the transactions took place in District 8. Lee attributes this to the area’s desirable location on the fringe of the city and lower prices compared to Districts 1 and 2.
At the same time, shophouse rents across the island fell for the second consecutive quarter, dropping 2.6% quarter-on-quarter to $6.47 psf per month in the fourth quarter of 2024. However, for the entire year, shophouse rents were up by 1.7%.
In conclusion, the shophouse market has remained relatively subdued in 2024, with the number of caveated transactions below the yearly average and rental rates experiencing a decline. Nevertheless, the sale of The Rail Mall has set a new record for the biggest shophouse deal, and the attractive location of District 8 continues to draw buyers to the area.