Prices of Shophouses in S’pore Have Increased by Millions in Months Due to Foreign Investors

By
Charleen Teh
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There are three common symbols that represent wealth: cars, property and branded goods.

In the past few months, a few coffeeshops have sold for tens of millions of dollars.,

The coffeeshop at Block 848 Yishun Street 81 changed hands for S$40 million, while the coffeeshop at Block 201 Tampines Street 21 broke records when it was sold for S$41.68 million.

Another hot property on the Singapore market are the conserved shophouses.

Conserved shophouses are heritage buildings that were built between the 1840s and 1960s, which have been meticulously preserved to showcase Singapore’s evolving cityscape.

Given that there are only about 6,760 conserved shophouses in Singapore, the market price borne from its scarcity and heritage value can be well-imagined.

Rising Prices of Shophouses

In February 2021, a 1,149 sq ft freehold unit in 148 Arab Street was bought for $5.5 million.

After owning the property for 14 months, the owner managed to sell it in April 2012 for $10 million, thus earning him a profit of $4.5 million.

Likewise for a three-storey freehold shophouse in Stanley Street, Chinatown, a local snapped up the property for approximately $11.5 million, only to sell it to a foreigner eight months later for $15.5 million.

Numerous shophouse units in Upper Dickson Road have also changed hands in the less than six months, and each seller had made off with $550,000 in profits.

To give a better measure of how profitable the buying and selling of these conserved shophouses are, 114 shophouses were sold in the first six months of this year and they were worth $939.8 million in total.

Now compare this to the same period in 2021. 113 shophouses were sold then, and they were worth $919 million.

Who Are Buying These Shophouses?

Typically, the ownership of these shophouses can span anywhere from a few months to decades.

According to industry observers, these shophouses have always sold at high prices due to its short supply and high demand.

But what is driving up the prices now is likely the new wave of demand coming from foreign investors.

The appeal of conserved shophouses lie in the fact that they are a heritage asset that sets them apart from other class assets.

By virtue of its scarcity and historical value, the prices for these shophouses will only increase with time, or at the very least, maintain the price of when it was purchased.

To foreign investors, Singapore is akin to a safe haven for them to store and accumulate their wealth.

Owning a shophouse is one of the methods since data has shown time and time again that these shophouses are profitable.

Purchasers view these shophouses as an opportunity to safeguard themselves against inflation as these heritage assets are less volatile than the equity market and other class assets.

Hence, they are willing to pay premium prices just to own one.  

For instance, other shophouses in Tanjong Pagar, Little India, Kampong Glam, and Geylang have exchanged hands for at least $9 million in price, according to Urban Redevelopment Authority data.

These conservation areas are also prime districts too, which means that they tend to have higher yields because of the higher footfalls. These units can also be rented out easily, which makes them doubly attractive to investors.

Since there is a rising demand for them, the prices for these shophouses are bound to go up.

Buyers who have kept these heritage assets as stocks will be keen on selling them when the demand is strong because they will inevitably profit.

In light of this news, you can only say that the rich really know how to find financial derivatives to generate more money from money.

Well, at least we know who to blame when we see the expensive prices of foods and goods in the area.

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Charleen Teh
Email: [email protected]