Singapore shophouses a bright spot for property investment sales in 2020: Colliers

Assets up for sale in Singapore include a 199-year leasehold conservation shophouse in Boat Quay.
Assets up for sale in Singapore include a 199-year leasehold conservation shophouse in Boat Quay.PHOTO: ERA REALTY

SINGAPORE (THE BUSINESS TIMES) - As the Covid-19 pandemic put a dent on overall property investment activity in 2020, shophouses in Singapore proved an exception as the only other segment after commercial and mixed-use to improve from 2019.

According to real estate consultancy Colliers International, 18 shophouses - each more than $10 million and worth a total of $288 million - transacted in the the fourth quarter of 2020 alone.

This marks the best quarterly showing since the first quarter of 2018's $401.7 million record, and brings shophouse investment sales for the full year to $467 million. It represents a 16.1 per cent increase from 2019 figures even as overall property investment sales in 2020 declined 16.7 per cent year on year, noted Colliers in a report on Wednesday (Jan 27).

Commercial assets made up the lion's share of 2020's transactions at 52 per cent. The sector saw 8.8 per cent volume growth to $18.8 billion, boosted by CapitaLand Mall Trust's acquisition of CapitaLand Commercial Trust's assets upon their merger in the fourth quarter of 2020.

Beyond the merger, Colliers also observed increased institutional acquisition of prime office buildings, attributed to more technology giants setting up bases in Singapore and the Urban Redevelopment Authority's incentive scheme rejuvenation of older precincts.

Meanwhile, residential and industrial investment sales volumes fell 23.6 per cent and 43.3 per cent from 2019 levels respectively on a weak 2020 first-half showing and the absence of real estate investment trust transactions.

Nonetheless, Colliers said it expects private land sales via collective sales to recover in 2021. It also sees positive long-term growth in the industrial segment as investors seek warehouses, data centres and high-specs space to leverage growing e-commerce and technology trends.

The firm is anticipating a strong recovery to pre-pandemic levels in 2021, with its projected 20 per cent growth in overall investment sales to $29.7 billion. It recommends that investors focus on assets with long-term growth drivers, such as Central Business District office buildings with income or redevelopment potential, as well as logistics assets and shophouses.

Prime shophouses are sought after as they offer capital preservation and stable rental income, said Colliers.

Assets up for sale in Singapore include a 199-year leasehold conservation shophouse in Boat Quay, as well as several shophouses in Tanjong Pagar, Outram Park, Craig Road, Desker Road and Holland Village, as reported in The Business Times earlier this month.