The prices of commercial shophouses are expected to increase due to limited supply and high demand. Although interest rates have settled in the first half of the year, analysts anticipate that the moderation in rates in the next months will cause a rebound.
According to market watchers, prices may go up to 10% based on the location since investors are looking for safe-haven assets amid economic issues and rental upside projections.
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The latest property cooling measures also contributed to the price increase as buyers turn to commercial properties instead of residential ones.
The additional buyer’s stamp duty for foreigners doubled to 60% in April, making it expensive for this group to get a residential property. However, shophouses are zoned for commercial purposes and are therefore not subject to ABSD or the seller’s stamp duty.
“Under the increased ABSD, those who are affected, such as foreign investors and companies will be looking at asset classes like shophouses,” stated Eugene Lim, ERA Realty Network’s key executive officer.
“They are attractive because they are not too big a capital outlay and yet allow the investor to invest in the Singapore property market.”
In the first half of the year, six shophouses were sold for over S$20 million. It includes Liberty House at 51 Club Street, a 28,876 square feet, five-story commercial building. This property was sold for S$92.2 million in April, making it the most expensive shophouse this year.
“Over the last one week, I had at least five inquiries. I had two viewings – one local and one from a foreigner,” said the property’s managing agent Richard Tan.
Overseas investors make up a third of shophouse sales in the country.
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