25 Jun 2024
The Shophouse Segment: Market Dynamics and Outlook
Property Insight

Overview of Singapore's Shophouse Market

Shophouses in Singapore, significant for their historical and architectural value, are a crucial part of the country's urban planning. Constructed during the 1800s and 1900s, these buildings have been renovated for modern uses while preserving their distinct architecture. Approximately 6,500 conserved shophouses exist in Singapore, mainly located in historic districts such as Balestier, Beach Road, Geylang, Boat Quay, Chinatown, Kampong Glam, and Little India. These areas offer various uses, from commercial and residential to mixed-use, making shophouses valuable assets.

Impact of Tourism on Shophouse Demand

Singapore's tourism sector showed a strong recovery in 2023, with international visitor arrivals reaching 13.6 million, about 71% of 2019 levels. The hotel industry's performance, with Average Room Rate (ARR) and Revenue per Available Room (RevPAR) surpassing 2019 levels, reflects robust tourism activity. In Q1 2024, international visitor arrivals totaled 4.35 million, a 25.6% increase from the previous quarter. Key markets driving this growth included China, Indonesia, and Malaysia.

Shophouse Transactions and Values

The demand for conservation shophouses boosted the number of transactions from 14 units in 4Q2023 to 21 units in 1Q2024. The total value of these transactions increased by 67.9%, from $107.6 million to $180.7 million. Notable transactions included the sale of a freehold shophouse at 31 Pagoda Street for $19.0 million and three adjoining shophouses in Geylang for $18.7 million.

Rental Market Dynamics

In 1Q2024, the volume of shophouse rental transactions moderated by 4.7% from the previous quarter, totaling approximately 864 transactions. However, the total leasing value increased marginally by 1.1% to $9.7 million, the highest quarterly rental value since 1Q2023. Median monthly rentals for shophouse transactions increased to $6.43 psf in 1Q2024 from $6.36 psf in 4Q2023.

Future Outlook and Strategic Shifts

The demand for shophouses is expected to remain strong, driven by positive tourism trends and the implementation of mutual 30-day visa-free travel between China and Singapore. International visitor arrivals are projected to reach 15 to 16 million in 2024, with tourism receipts estimated at $26.0 to $27.5 billion. The restoration of flight connectivity and positive travel demand trends provide a stable foundation for growth.

Additionally, property cooling measures introduced in April 2023, such as increased Additional Buyer's Stamp Duty (ABSD) rates, have made commercial properties like shophouses more attractive investments. Shophouses that are entirely commercial are not subject to ABSD, benefiting foreign investors and Singaporeans who already own property.

Conclusion

The report highlights the resilience and attractiveness of Singapore's shophouse market. Despite potential global economic headwinds, the positive economic recovery and robust tourism sector are expected to sustain demand for shophouses. Investors, including family offices, are likely to continue considering shophouses as viable investment options. The unique historical and architectural value of shophouses, combined with their limited supply, ensures their continued appeal in Singapore's real estate market.

 Click here for the full report   

Prepared By: 

Mohan Sandrasegeran 

Head of Research & Data Analytics  

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Singapore's shophouse market in 1H2026 demonstrated continued resilience despite a moderation in transaction volumes, with investment activity increasingly concentrated in higher-value assets. While the number of caveated shophouse transactions declined from 34 deals in 1H2025 to 25 deals in 1H2026, the total transaction value increased by 14.9% year-on-year, rising from $234.7 million to $269.5 million. This suggests that investors remained willing to deploy significant capital into larger, well-located and higher-quality conservation assets, reinforcing confidence in the long-term fundamentals of the shophouse sector.

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Looking ahead, investment demand is expected to remain resilient through the second half of 2026, supported by Singapore's healthy economic performance, lower interest rate environment and the structural scarcity of conserved shophouses. Investors are likely to continue prioritising well-located assets offering resilient rental income, asset enhancement opportunities and long-term capital appreciation. The combination of limited supply, heritage value and stable income-generating potential is expected to provide continued support for transaction values and reinforce the long-term attractiveness of Singapore's shophouse market.

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Prepared By:

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Head of Research & Data Analytics

Email: mohan@sri.com.sg

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