Shophouse transactions dipped in the first quarter of 2023 as total transactions fell 12.1% and total value dropped 5.7% quarter-on-quarter. According to a research report by Huttons Asia, there were only 29 caveated shophouse transactions in 1Q2023 and the total transaction value for shophouses in the quarter amounted to $281.8 million.

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Starting off the quarter following the Lunar New Year festivities, there were only five shophouse transactions recorded in January. The following two months saw a gradual uptick in activity, with nine and 15 transactions recorded in February and March respectively.

The total decline in shophouse transactions was balanced out by the average transacted value per shophouse, which was 8.1% higher quarter-on-quarter at $9.7 million. This was due to the two highest transactions of the quarter – the sale of six freehold shophouses on Serangoon Road for $62.5 million and the sale of a 999-year shophouse at Boat Quay for $37 million.

When it came to rental market in 1Q2023, there was a 1.5% quarter-on-quarter uptick in median rents across the island. District 15 stood out with shophouse rents surging 15.8% quarter-on-quarter to $5.49 psf per month.

Lee Sze Teck, senior director of research at Huttons, remarked that shophouses are popular investment vehicles as they help investors preserve their wealth. The area around Little India and Jalan Besar, which falls within Rochor planning area, ranked as the most popular area accounting for 31% of all transactions in the quarter.

Looking ahead, Lee believes demand for shophouses will continue to rise due to its limited supply and its ability to provide wealthy individuals and family offices a chance to preserve their wealth over long-term. The recent cooling measures announced on April 27, which include a hike in Additional Buyer’s Stamp Duty for foreign buyers, could also contribute to demand for shophouses as investors seek alternative investments. Lee predicts that demand and prices will trend upwards in the coming months.