Shophouse outlook softens amid investor pushback on valuations

Sales for 2025 are projected to hit between S$700m and S$800m.

Shophouse sales are expected to decline in 2025 as economic and financial pressures push investors and buyers into a wait-and-see mode.

In a report, Knight Frank said it expects total sales volume for shophouses to range $700m to $800m by year-end, lower than the $947.8m recorded in 2024.

Although many investors remain on the lookout for shophouse opportunities, Knight Frank underscored that private wealth can “afford to wait until price expectations align.”

Knight Frank said shophouse prices are holding up, as these assets are limited in supply and viewed as valuable long-term investments.

Shophouse sales in H1 2025 fell to 42 transactions valued at $462.9m, marking eight fewer deals and an 11.0% drop in value compared to H2 2024’s 50 transactions worth $520.2m.

Knight Frank pointed out that certain shophouse deals in H1 2025 were not officially recorded or caveated.

Despite the quiet market, average unit prices held steady, edging up 0.5% to $6,431 psf on land in H1 2025 from $6,397 psf in H2 2024.

Of the 42 shophouse transactions in H1 2025, 37 were freehold, seven fewer than the 44 recorded in H2 2024. The total sales value of these freehold units declined by 25.5% to $358.4m from S$480.8m in the preceding half.

Average unit prices also slipped 4.1% to $6,217 psf on land, down from $6,485 psf, amid growing buyer resistance to perceived premium pricing.

Meanwhile, leasehold shophouses continued to trail in volume, with just five transactions recorded. Yet, the total sales value jumped 165.3% to $104.6m in H1 2025, up from $39.4m in H2 2024, even with one fewer transaction.

The average unit price for leasehold units also rose significantly by 33.5%, from $5,440 psf to $7,260 psf on land.

Shophouse sales in H1 2025 were led by hotel transactions, with 21 Carpenter, Duxton Reserve, and Coliwoo Hotel Gay World topping the list.

21 Carpenter was sold in April for $100.0m ($2.1m per key, ~$14,199 psf on land), while Duxton Reserve and Coliwoo Hotel Gay World were sold in May for $80.0m ($1.6m per key, ~$8,183 psf) and $25.8m ($955,556 per key, ~$7,843 psf), respectively.

Sector-wise, shophouse sales were concentrated in the living sector, as investors showed greater interest in shophouse hotels over F&B-approved units.

“The growing investment interest for living sector assets in Singapore is a result of the country’s safe haven reputation and the steady stream of international visitor arrivals to Singapore for both leisure and business,” Knight Frank said.

“However, hotels, serviced residences as well as co-living facilities are typically tightly held with limited investible inventory, and investors have ventured into the shophouse market for the more boutique option of shophouse hotels, where revenue generating living sector businesses operate in heritage buildings,” it added.