According to the latest quarterly research report by Huttons Asia, the shophouse market has seen a relatively muted performance in 2024, with only 84 caveated transactions recorded. This number falls below the average of 200 shophouse deals per year between 1995 and 2023.
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Lee Sze Teck, senior director of data analytics at Huttons Asia, notes that while many buyers did not lodge a caveat, the number of shophouse deals in 2024 is likely the lowest since 1998.
A closer look at the transaction volume and quantum of shophouses in 2024 reveals a total value of $683.6 million, a 38.9% decrease from the $1.1 billion recorded in the previous year. However, Lee points out that there were also substantial deals that were not caveated, such as properties on Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street, estimated to have been sold for more than $200 million.
The largest shophouse deal in 2024 was the sale of The Rail Mall by Paragon REIT for $78.5 million in June. According to Lee, this is likely the biggest shophouse deal on record, surpassing the previous high of $74.8 million for a row of shophouses on Jalan Sultan in March 2022.
The Rail Mall shophouses, valued at $62 million in December 2023, resulted in an estimated gain of $16.5 million for the seller. However, most shophouse transactions in 2024 were for smaller quantums, with over half of the recorded deals ranging from $5 million to $15 million.
Furthermore, nearly half of the shophouse transactions last year took place in District 8, which Lee attributes to its attractive city-fringe location and lower prices compared to Districts 1 and 2.
On the other hand, shophouse rents across the island saw a moderation for the second consecutive quarter, dropping 2.6% quarter-on-quarter to $6.47 psf per month in 4Q2024. Nevertheless, for the entire year of 2024, shophouse rents saw a 1.7% increase.
Overall, while the shophouse market remained subdued in 2024, there were some significant deals that contributed to the total transaction volume and quantum. This, combined with the attractive location and relatively lower prices in District 8, may continue to attract buyers to the shophouse market in the future.