Fewer caveats lodged for shophouse sales, but agents say market sentiment in S’pore has improved

SINGAPORE – The commercial shophouse market appears to be on the upswing despite just 16 caveats being lodged between April and June, as nearly 12 transactions were not caveated, PropNex noted in a shophouse research report released on July 25.

The caveats filed in the second quarter of 2024 were 30 per cent lower than the 23 lodged in the first three months of the year.

But property agents say market sentiment has in fact improved, noting that the actual number of sales is higher, owing to more non-caveated transactions.

“My team closed over 20 shophouse deals; some of them had caveats lodged. We have received more interest now and prices are still firm,” said Mr Richard Tan, founder of PropNex Shophouse Elites.

PropNex noted that nearly a dozen deals did not have caveats lodged, including shophouses in Amoy Street, Geylang Road and Chinatown.

“I sold six shophouses in the past three months, and all the buyers did not want to lodge a caveat as they wanted to keep a low profile,” added Mr Tan.

“All are local buyers, with three deals in Kampong Glam and the rest in the Central Business District. Four of these buyers were purchasing shophouses for the first time.”

A buyer lodges a caveat with the Singapore Land Authority to secure a property, but not all buyers do so as it is not mandatory.

For instance, of the 13 shophouses linked to the

$3 billion money laundering case

that were sold in recent months, only one had a caveat lodged, noted Mr Tan.

The Business Times reported in June that DBS Bank was understood to have

accepted offers totalling more than $100 million

for 13 shophouses linked to the money laundering scandal that surfaced in Singapore in August 2023.

PropNex’s report noted that in terms of transaction value, the deals from April to June amounted to $164 million, marking an 11.5 per cent decline from the $185 million recorded in the previous quarter. On a year-on-year basis, the sales value fell by about 62 per cent from $432 million from April to June in 2023.

Based on caveats lodged, District 8 (Little India, Jalan Besar) posted the highest number of sales transactions, with eight deals out of the 16 transactions from April to June in 2024, said PropNex.

Fewer big-ticket purchases were noted, with nine deals priced at between $2.5 million and $5 million, and the rest above $5 million.

The top transaction of the quarter was

the sale of The Rail Mall

in Upper Bukit Timah Road for $78.5 million in June.

The site, with under 22 years left on its 99-year lease, has a land size of 105,563 sq ft and nearly 50,000 sq ft of net lettable area.

In May, a three-storey conservation shophouse in Telok Ayer Street with a land size of 1,429 sq ft – the only property linked to the money laundering case that had a caveat lodged – was sold for $16.5 million.

The shophouse market, previously in high demand among foreign investors, saw a significant slump with just 15 caveats lodged in the last three months of 2023.

Sales plummeted to their lowest in 13 years

, following the billion-dollar money laundering case, in which at least 10 foreigners were convicted.

Mr Tan attributed the “notably quiet” first three months of 2024 to potential buyers waiting for the outcome of the sale of properties linked to the case.

He added that the current increased interest from buyers reflects a more optimistic outlook for the shophouse market.

Still, the PropNex report noted that the fallout from the money laundering crackdown could drag down buyers’ sentiment in the shophouse market. Other contributing factors include market uncertainties, pricing disparities and limited unit availability.

Overall shophouse prices may fluctuate over the near term due to the limited transaction volume.

However, PropNex expects Singapore’s projected economic recovery to support the shophouse market in the latter half of 2024.

Mr Sonny Yuen, a property agent with Huttons Asia, who is currently marketing a shophouse in Little India, said he has received a number of inquiries since he started advertising the unit two weeks ago.

There has been a mix of both foreign and local buyers, but these “buyers are very selective and they know exactly what they want”, he said.