Jul 12, 2010 - PropertyGuru.com.sg
The number and value of shophouses and strata shops transacted in the first half of 2010 were down slightly compared with the previous half year, according to a study conducted by Knight Frank.
However, the property consultancy firm predicts that the result for the whole-2010 will exceed that of 2009. Mary Sai, executive director of Knight Frank, said that this will support demand among entrepreneurs in the property market, assuming that businesses will continue to be optimistic.
In terms of subdued interest in strata shops for the first-half of 2010, she said that this attributed to the sellers’ high asking price. “The availability of substitute properties like HDB shops also affects investors' interest in strata shops,” she added.
The firm’s study did not include HDB shophouses and shops.
It showed that about 167 strata shop units in the private sector were transacted in the first half of 2010 amounting to $200.1 million, down from 209 deals worth $214.6 million in H2 last year. For the whole-2009, it recorded total transactions of 306 deals worth $278 million.
Most of the popular strata shop deals in H1 2010 include Sim Lim Square and Peninsula Plaza at North Bridge Road, with 12 caveats each.
Sales activity in the Upper Bukit Timah area was also high, with 16 caveats lodged for shops in the three neighbouring malls – Bukit Timah Plaza, Bukit Timah Shopping Centre and Beauty World Centre – fuelled by the Beauty World MRT Station.
The firm also said that half of the strata shops that have been sold between H2 last year and H1 this year were mostly 99-year leasehold shops. Ms. Sai said that, “the bulk of the strata shop space in Singapore has 99-year leasehold title. Such properties are also more affordable and because of their lower capital value, rental yields tend to be higher.”
Strata shops that have been the centre of activity in the first half of this year include People's Park Complex, Fortune Centre, High Street Centre, Golden Mile Complex, Bukit Timah Plaza, Beauty World Centre, Sim Lim Square and Fu Lu Shou Complex.
In the 999-year lease/freehold category, shop units at Katong Shopping Centre, Holland Road Shopping Centre and Peninsula Plaza were highly sought after.
Meanwhile, the most expensive transaction between January and June this year in terms of psf of strata space was a 355-sq-ft ground-floor unit at Sim Lim Square at $8,977 psf. It was transacted in May at $3.19 million.
As for the shophouse market, Ms. Sai expects that for the whole-2010, around 330 transactions worth more than $700 million could be seen, exceeding the 261 caveats worth $630 million for the whole of last year.
Ms. Sai said that the “buying interest in shophouses will remain strong due to limited supply and the flexibility of usage - for retail, office, boutique hotel or residential.”
According to Knight Frank's analysis of caveats on the URA Realis system, 165 caveats lodged at a total $408.7 million were recorded in the first half of this year alone, down from 167 transactions at $446.7 million in H2 last year. The decline was amid a fall in transactions from 17 deals in H2 2009 to 11 in H1 2010.
Many industry players noted that those eyeing to purchase shophouses or strata shop units will have to use cash resources or bank loans.
Ong Choon Fah, executive director (consulting) of DTZ, also noted that those planning to acquire shophouses must first do their homework. “Some shophouses are very old and may not have been renovated; you'll have to check if they are structurally sound,” she said
“You should also check with Urban Redevelopment Authority whether you are allowed to build a taller rear extension.”
Underpinned by limited supply and the unique design and architecture, shophouses will remain favourable for buyers. “When you buy a shophouse, especially if it's in a conservation area, you also own a piece of history,” said Ms. Ong.