SHOPHOUSE - Cushman & Wakefield

SHOPHOUSE
MARKET SNAPSHOT
SINGAPORE
Q2 2014
Research Services
Advance estimates show that the Singapore
economy recorded a positive growth of 2.1%
in the second quarter of 2014. However, the
government’s policy of tightening foreign
labour influx resulted in 1,900 new
employment in the wholesale and retail
trade in the first quarter of 2014, a reduction from the 8,400 added
in the previous quarter. Employment in accommodation and food
services fared worse, with a contraction of 100 workers in the first
quarter this year, as compared to an increase of 6,600 previously.
SHOPHOUSE INVESTMENT SALES (ISLANDWIDE)
900
Investment Sales (SGD millions)
ECONOMIC OVERVIEW
SHOPHOUSE MARKET OVERVIEW
This is reflected in the prices of shophouses in the Central Area,
which have been steadily increasing over the years due to limited
supply. Prices of 99-year leasehold shophouses experienced 23.5%
annual growth on average since 2009, reaching S$4,098 psf (on land
area) in 1H2014. Prices of 999-year and freehold shophouses also
experienced average annual growth of 24.5% to reach S$5,693 psf.
Shophouses in the Telok Ayer Conservation Area command higher
prices due to their prime location in the Central Business District
(CBD). The prices of 999-year and freehold shophouses in the
Telok Ayer surged from S$2,499 psf (on land area) in 2009 to
S$6,903 psf (on land area) in 1H2014, an annual growth of 25.3%.
Volume and possibly prices may moderate due to the recent policy
by the URA to tighten the approvals for hotel, boarding house and
hostel uses for sites not zoned for such uses in the Central Area.
This is likely to reduce demand, especially for contiguous rows of
shophouses which previously had potential for conversion into
hotels or hostels. However, shophouses in the Central Area which
have already been approved for such a change in use are expected
to be well sought after and are likely to see an increase in values.
OUTLOOK
We expect shophouse investment sales to remain slow for the
second half of the year. However, due to the limited supply of
shophouses in the Central Area, any moderation in prices is not
expected to be large and the market is expected to remain resilient
in the long term.
3 Church Street
Samsung Hub #09-03
Singapore 049483
Tel: +65 6535 3232
www.cushmanwakefield.com
For more information, contact:
Teo Li Kim
Director, Research, Singapore
Tel: +(65) 6232 0815
[email protected]
600
500
400
300
200
100
2009
2010
2011
2012
2013
1H2014
Source: URA, Cushman & Wakefield Research
PRICES IN CENTRAL AREA (CONSERVATION AREAS)
6,000
5,000
4,000
S$ Psf
Shophouses in the Central Area are highly popular due to their
prime location. Out of 328 shophouse investment sales transacted
within the period of 2009-1H2014, the majority (171) were in
Conservation Areas within the Central Area.
700
0
3,000
2,000
1,000
0
2009
2010
2011
99-yr
2012
2013
1H2014
999-yr/FH
Source: URA, Cushman & Wakefield Research
Note: S$ Psf values are based on land area
PRICES IN TELOK AYER CONSERVATION AREA
8,000
7,000
6,000
(S$ Psf)
Shophouse investment sales totaled S$165m in 1H2014. This is in
contrast to investment sales of S$685m in 1H2013, representing a
year-on-year decline of 75.9%. This drop could be attributed to the
cumulative effects of the government cooling measures and the
Total Debt Servicing Ratio.
800
5,000
4,000
3,000
2,000
1,000
0
2009
2010
2011
99-yr
2012
2013
1H2014
999-yr/FH
Source: URA, Cushman & Wakefield Research
Note: S$ Psf values are based on land area
This report contains information available to the public and has been relied upon by Cushman
& Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no
responsibility if this should prove not to be the case. No warranty or representation, express
or implied, is made to the accuracy or completeness of the information contained herein, and
same is submitted subject to errors, omissions, change of price, rental or other conditions,
withdrawal without notice, and to any special listing conditions imposed by our principals.
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