Chart of the Day: Median price of shophouses reached record high of $3,772 psf in 2014

It posted a 37.0% increase year-on-year.

Shophouses continue to be a bright spot in the property market, as their uniqueness never fails to spur interest from business owners.

According to a report by Colliers, despite the moderated demand in recent times, the median price of shophouses islandwide has remained largely stable. It generally hovered in the region of $750 per sq ft (based on land area) in the period from 1Q 2000 to 4Q 2006, and gradually rose to between $950 per sq ft and $1,300 per sq ft from 1Q 2007 to 3Q 2009 despite the onset of the global financial crisis towards the end of 2008.

Colliers adds that the steep ascent started in 4Q 2009, riding on the recovery of the property market following the strong economic growth. The price increase from $1,455 per sq ft in 4Q 2009 to $2,754 per sq ft in 4Q 2013, translates to an increase of 89.3% over four years. The median price of shophouses then posted a 37.0% year-on-year increase in 2014 to a record high of $3,772 per sq ft in 4Q 20145 - a testament to the capital appreciation potential of these unique buildings.

The price escalation reflects a growing interest by companies who have bought self-occupied shophouses in order to have more control over occupancy costs in view of rising rents in the office market over the years.

For business owners, the investment and redevelopment potential of shophouses also provides flexibility for expansion and potential capital gains. Additionally, this property type gradually gained traction with investors who realised that there is also healthy demand in the leasing market from architectural firms, design houses, publishing companies and start-ups.  

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