Shophouses beat slump in last year's property investment sales

While the pandemic put a dent in overall property investment last year, shophouses proved to be an exception as the only other segment after commercial and mixed-use to improve from 2019.

Prime shophouses are sought after as they offer capital preservation and stable rental income, said real estate consultancy Colliers International.

It noted that 18 shophouses – each worth more than $10 million or $288 million in all – sold in the fourth quarter of last year alone.

This marked the best quarterly showing since the first three months of 2018, when sales of $401.7 million were recorded.

It also brought shophouse investment sales for the full year to $467 million, up 16.1 per cent on 2019, despite overall property investment sales last year declining 16.7 per cent year on year, noted Colliers yesterday.

Commercial assets accounted for 52 per cent of last year’s transactions. The sector recorded an 8.8 per cent volume growth to $18.8 billion, boosted by CapitaLand Mall Trust’s acquisition of CapitaLand Commercial Trust’s assets upon their merger in the fourth quarter.

Colliers also noted increased institutional acquisition of prime office blocks, attributed to more technology giants setting up bases here and the Urban Redevelopment Authority’s incentive scheme to rejuvenate older precincts.

Meanwhile, residential investment sale volumes fell 23.6 per cent from 2019, while those for industrial sites dived 43.3 per cent on a weak first-half showing and the absence of real estate investment trust transactions.

Colliers said it expects private land transactions via collective sales to recover this year. It also sees long-term growth in the industrial segment as investors seek warehouses, data centres and high-specifications space to leverage growing e-commerce and tech trends.

The firm anticipates a strong recovery to pre-pandemic levels this year, with its projected 20 per cent growth in overall investment sales to $29.7 billion.

It recommends that investors focus on assets with long-term growth drivers, such as Central Business District office buildings with income or redevelopment potential as well as logistics assets and shophouses.

Assets up for sale include a 199-year leasehold conservation shophouse in Boat Quay, as well as several shophouses in Tanjong Pagar, Outram Park, Craig Road, Desker Road and Holland Village.

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