SHOPHOUSE MARKET SNAPSHOT SINGAPORE Q2 2014 Research Services Advance estimates show that the Singapore economy recorded a positive growth of 2.1% in the second quarter of 2014. However, the government’s policy of tightening foreign labour influx resulted in 1,900 new employment in the wholesale and retail trade in the first quarter of 2014, a reduction from the 8,400 added in the previous quarter. Employment in accommodation and food services fared worse, with a contraction of 100 workers in the first quarter this year, as compared to an increase of 6,600 previously. SHOPHOUSE INVESTMENT SALES (ISLANDWIDE) 900 Investment Sales (SGD millions) ECONOMIC OVERVIEW SHOPHOUSE MARKET OVERVIEW This is reflected in the prices of shophouses in the Central Area, which have been steadily increasing over the years due to limited supply. Prices of 99-year leasehold shophouses experienced 23.5% annual growth on average since 2009, reaching S$4,098 psf (on land area) in 1H2014. Prices of 999-year and freehold shophouses also experienced average annual growth of 24.5% to reach S$5,693 psf. Shophouses in the Telok Ayer Conservation Area command higher prices due to their prime location in the Central Business District (CBD). The prices of 999-year and freehold shophouses in the Telok Ayer surged from S$2,499 psf (on land area) in 2009 to S$6,903 psf (on land area) in 1H2014, an annual growth of 25.3%. Volume and possibly prices may moderate due to the recent policy by the URA to tighten the approvals for hotel, boarding house and hostel uses for sites not zoned for such uses in the Central Area. This is likely to reduce demand, especially for contiguous rows of shophouses which previously had potential for conversion into hotels or hostels. However, shophouses in the Central Area which have already been approved for such a change in use are expected to be well sought after and are likely to see an increase in values. OUTLOOK We expect shophouse investment sales to remain slow for the second half of the year. However, due to the limited supply of shophouses in the Central Area, any moderation in prices is not expected to be large and the market is expected to remain resilient in the long term. 3 Church Street Samsung Hub #09-03 Singapore 049483 Tel: +65 6535 3232 www.cushmanwakefield.com For more information, contact: Teo Li Kim Director, Research, Singapore Tel: +(65) 6232 0815 [email protected] 600 500 400 300 200 100 2009 2010 2011 2012 2013 1H2014 Source: URA, Cushman & Wakefield Research PRICES IN CENTRAL AREA (CONSERVATION AREAS) 6,000 5,000 4,000 S$ Psf Shophouses in the Central Area are highly popular due to their prime location. Out of 328 shophouse investment sales transacted within the period of 2009-1H2014, the majority (171) were in Conservation Areas within the Central Area. 700 0 3,000 2,000 1,000 0 2009 2010 2011 99-yr 2012 2013 1H2014 999-yr/FH Source: URA, Cushman & Wakefield Research Note: S$ Psf values are based on land area PRICES IN TELOK AYER CONSERVATION AREA 8,000 7,000 6,000 (S$ Psf) Shophouse investment sales totaled S$165m in 1H2014. This is in contrast to investment sales of S$685m in 1H2013, representing a year-on-year decline of 75.9%. This drop could be attributed to the cumulative effects of the government cooling measures and the Total Debt Servicing Ratio. 800 5,000 4,000 3,000 2,000 1,000 0 2009 2010 2011 99-yr 2012 2013 1H2014 999-yr/FH Source: URA, Cushman & Wakefield Research Note: S$ Psf values are based on land area This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. ©2014 Cushman & Wakefield, Inc. All rights reserved. 1
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