The shophouse market in 2024 experienced its quietest year since 1998, with only 84 caveated transactions, according to Huttons’ latest report.
Despite a slight recovery in interest from the previous year’s low, the transaction volume remained well below the historical average of 200 transactions per year from 1995 to 2023. The total transacted value of these shophouses was $683.6m, marking a 38.9% decline from 2023’s $1.1b.
Investors have shown a preference for shophouses priced between $5m and $15m, with more than half of the transactions falling within this range. Shophouses with permission to operate food and beverage (F&B) outlets are particularly attractive due to their potential for higher returns. Notably, almost half of the transactions in 2024 occurred in District 8, likely due to its appealing city fringe location and competitive pricing compared to Districts 1 and 2.
The Rail Mall transaction stood out as the largest shophouse deal of the year, sold by Paragon Reit for $78.5m in June 2024. This sale surpassed the previous record of $74.8m for a row of shophouses along Jalan Sultan in March 2022.
Looking ahead, investors remain optimistic about the resilience and wealth-preserving qualities of shophouses, attributed to their scarcity. The recent interest rate cuts in the last quarter of 2024 are expected to lower borrowing costs, potentially stabilising transaction volumes and values in 2025.
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