Shophouses have always had a cool factor about them. But these icons of Southeast Asian architecture are now sought-after by local and foreign investors alike for reasons beyond that
When you think of Singapore, the things that come to mind immediately are its multi-cultural cuisine, swanky malls and high-rise residences. Amidst these, and in complete contrast, are its bold, bright and ornate shophouses. As the name suggests, these often two- to three-level buildings have shops on the lower levels and residences above—they used to house the merchants and owners of these shops in the 19th century. Shophouses are an integral part of Singapore’s heritage, and for years now locals and foreign investors have been vying for a piece of that pie.
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Although Singapore has always attracted foreign investments in the property market, when it comes to shophouses, about 80 per cent of purchasers are Singaporeans, who look at them for both investment purposes and capital appreciation, says Mary Sai, executive director, Capital Markets (Land & Building, Collective & Strata Sales) at Knight Frank Singapore.
Yap Hui Yee, director of Investment Sales & Capital Markets at Savills (Singapore) Pte Ltd, agrees. Her team has brokered approximately $130 million shophouse transactions to Singaporeans of high net worth and foreigners based here in the past four months—with only 20 per cent of buyers from the latter category.
According to Knight Frank’s Wealth Report 2021, the number of Ultra High Net Worth Individuals—with a net worth of US$30 million inclusive of their primary residence—in 2020 went up by 10.2 per cent from 2019 despite the pandemic-led recession. “Besides other luxury properties in Singapore, shophouses also provide a draw for such investors looking into niche commercial space with cultural character,” says Sai.
The number is steadily rising, notes Clive Chng, associate director of Red Brick Mortgage Advisory. In 2020 amidst the pandemic, 135 shophouses were sold, which was a 10 per cent increase from the 123 shophouses that were sold in 2019.
Shophouses also provide a draw for such investors looking into niche commercial space with cultural character
— Mary Sai, executive director, Capital Markets (Land & Building, Collective & Strata Sales) at Knight Frank Singapore
“Shophouses have already captured the imagination of foreign investors with its rarity and hence heritage value, which provides a capital preservation element to the investment,” says Fang Low, CEO and co-founder of Figment, which focuses on reviving these charming icons of the old world as co-living spaces.
Besides, there are only 6,500 shophouses in total around Singapore, and they are gazetted as conservation buildings. For many Singaporeans like Low, the investments are more of an emotional nature—“there are elements of cultural value and historical significance that a financial term sheet could never capture”, he says.
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