Rents could have reached a peak due to the increased resistance of tenants to rent increases, but they are likely to remain steady moving forward.

The third quarter of 2023 saw fewer shops change hands as foreign buyers take time out after the S$2.8bn crackdown on money-laundering in August.

In the meantime, transaction volumes are expected to remain low and prices to remain flat. Shophouse owners don’t sell even if they have several shophouses. Shophouses have many uses. They can be turned into restaurants, gyms and hostels.

Owners of shops tend to be long-term investors and won’t sell without a price that is appealing. But not all buyers want to pay top dollar because the interest rate environment today and other more lucrative investment options are available.

In September of 2023, only eight transactions have been recorded. This is down from the 19 transactions in the previous months.

Market watchers have said that after 10 foreign nationals had been arrested in August, the increased scrutiny and customer due diligence has dampened demand.

There were 152 orders prohibiting disposal. These included residential properties (94), commercial properties (53), and industrial properties (5).

Shophouse rents eased 3.9 per cent in Q3, to S$5.97 psf/month, after increasing for seven consecutive quarterly quarters starting Q4 of 2021.

Su Jianfeng – one of the ten accused persons – is involved in a transaction involving the freehold shophouse, 28 Keong Saik Road. This property is held by a corporation.

Lee Nai Jia of PropertyGuru Group’s head of real estate data, software and intelligence solutions, explained that a range of factors could have contributed to the recent decrease in shophouses.

Although increased regulatory scrutiny and enhanced due diligence might slow sales activity temporarily, it would be reasonable to see this as an unavoidable fluctuation.

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Richard Tan said he had observed a drop in foreign buyers for the third quarter, but that his team was closing more deals ever since October.

He observed that despite the demand for lower-priced shops, the market for higher-priced ones is weaker because there are less buyers. He suggested that foreign investors may have taken a “wait-and-see” approach.

Shophouses accounted for the majority of transactions in Q3, including a three storey freehold shophouse along Cheong Chin Nam Road that sold in September at S$41 million, as well as a row three adjoining, two-storey shops on Jalan Besar which had a 6,378 sq. ft. land area and sold at S$38.5.

In the July-to-September timeframe, both the value and volume of shophouse transactions were far lower than the previous peak reached in 2021.

This year, there were 73 recorded transactions in the second and fourth quarters. Shophouse sales totaled S$606million.

A Singapore vehicle owned by a Swiss company was reported to have purchased shophouses at Ann Siang Road, with a 1,446-square-foot total land area.

Due to its affordability and proximity to the city, District 8 attracted investors. This district accounted for a quarter of Q3 transactions.

Singapore has a limited number of shophouses, about 6,500 of which are conservation-listed.

Knight Frank revealed that sales for shophouses reached a high of S$1.9bn in 2021.

In the first 9 months of 2023 the number of shophouse transactions was under 120. This equated to about S$1.1bn. This is down on the 155 agreements worth S$1.3bn that were struck in the previous nine-month period.

Huttons Asia, based on the data of the Urban Redevelopment Authority, has reported that 37 shops were sold during Q3. The 37 shophouses were 21,3 percent lower than the previous three months, but still higher compared to 36 during the last period.

Huttons, in a report released on Friday (Nov 10), revealed that the transaction value dropped by 26.6%. It was S$317.1 from S$432.3 during Q2.