Old is Gold: 5 Reasons to Invest in Shophouses

by FindPropertyAgent.sg
26 Sep 2018

Revisiting one of Singapore’s most iconic architectures.

These quaint terraced houses, each with their exquisitely detailed facades, are a fixture of Singapore’s architectural heritage, symbolic of our nation’s diverse culture. Of late, there has been renewed interest in these charming buildings.

This year, the Singapore Business Review noted record growth in shophouse transactions. This segment has advanced 177% Quarter-on-Quarter, and 281% Year-on-Year. Since 2013, the total transaction value has crossed $478.6 million.

With all the attention surrounding shophouses, we give you 5 reasons to jump on this investment bandwagon:

Shophouses are unaffected by the new cooling measures

Shophouses remain largely unaffected by cooling measures introduced in July 2018, since the measures were implemented to control residential property prices. Without increased Additional Buyer’s Stamp Duty and Seller’s Stamp Duty rates, these gorgeous buildings are attracting more investors. They have lower loan-to-value rates to boot!

Favourable conditions in the commercial market

Shophouse rental rates generally correlate with those of offices and retail spaces. This year, the number of offices spaces available has seen a decline. This scarcity means greater bargaining power for landlords to increase rental prices.

Location, location, location

Shophouses make up a majority of the urban fabric within the old city centre in Singapore. You can see many of them along the Singapore River, as well as in the heritage districts of Kampong Glam, Chinatown and Little India. Often location near or in prime locations, shophouses see strong leasing prospects as they are a cheaper option for tenants compared to strata units in large malls or office towers in the city.

Recession-Proof Value

The prices of shophouses defend well against market volatility due to their scarcity and historical value. This is especially evident after the introduction of the total debt servicing ratio (TDSR) framework in June 2013. While the volume of shophouse transactions slowed during that period, prices remained firm for conservation shophouses in the prime CBD areas. Notably, two Telok Ayer shophouses fetched $18.2 million in early November 2015.

Own a little piece of history

These historical gems have witness our nation’s ascent from a little fishing port to a first world metropolis through the 1800s to this date. Shophouses – steeped in rich heritage and links to our past – will likely maintain their significance in our cityscape. This much is apparent from the government’s active conservation and restoration efforts.

Have we got your attention on these fascinating sentinels to the past yet? To learn more, contact your preferred salesperson at: https://www.findpropertyagent.sg