Shophouse investment sales plummeted 76% in 1H14

Demand won’t pick up anytime soon.

The country’s stringent property cooling measures are proving to be painful for the niche shophouse market. A report by Cushman and Wakefield revealed that shophouse investment sales plunged to $165m in 1H14, down 75.9% from $685m in the same period last year.

According to Cushman and Wakefield, this drop could mainly be attributed to the cumulative effects of the government cooling measures and the Total Debt Servicing Ratio.

The Urban Redevelopment Authority’s recent move to tighten the approvals for hotel, boarding house and hostel uses for sites not zoned for such uses in the Central Area is also likely to depress demand further.

“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,” noted Cushman and Wakefield.