Shophouse sales slow in H1 amid macro volatility; investors shift away from F&B assets
Living sector assets, including shophouse hotels, are attracting growing interest as Singapore’s tourism sector recovers
[SINGAPORE] Activity in the shophouse market was tepid in the first half of 2025, with both the number and value of recorded deals falling as investors adopted a wait-and-see approach amid growing macroeconomic uncertainty.
Shophouse deals totalled S$462.9 million across 42 units in H1 2025, down from S$520.2 million across 50 units in H2 2024, according to a Knight Frank Singapore report released on Monday (Aug 4).
Despite the declines, the average unit price edged up 0.5 per cent to S$6,431 per square foot (psf) on land in H1 2025, from S$6,397 psf in H2 2024.
Knight Frank noted that some investors and buyers are holding back in anticipation of prices softening under economic and financial pressures, following sweeping tariff announcements by US President Donald Trump – developments that have contributed to a more cautious growth outlook for Singapore’s gross domestic product.
Beyond macroeconomic concerns, the market is also seeing a shift in investor preference. Interest is tapering off for shophouses approved for food and beverage (F&B) use.
“With the F&B sector facing challenges in the recent times, living sector assets in shophouses are growing more attractive to investors,” said Mary Sai, Knight Frank’s executive director of capital markets.
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In H1 2025, sales activity was largely supported by transactions of shophouse hotels. The top three deals were: heritage hotel 21 Carpenter at S$100 million, Duxton Reserve at S$80 million, and Coliwoo Hotel Gay World at S$25.8 million.
This growing interest in living sector assets is underpinned by Singapore’s reputation as a safe haven and a steady stream of international arrivals for both business and leisure, said Knight Frank.
With hotels, serviced residences and co-living facilities tightly held and offering limited investible stock, investors are turning to boutique shophouse hotels as an alternative, it added.
In a separate report published on Jul 24 this year, PropNex noted that shophouse hospitality assets remain attractive, supported by expectations of continued tourism growth in 2025.
PropNex also observed a rise in big-ticket purchases in Q2 2025. Of the 18 deals lodged, more than half were above S$5 million, while 22 per cent were below that threshold.
Based on caveats, the top deal in Q2 was the sale of a shophouse in the Bukit Pasoh conservation area for S$12 million in April. The sale price for the freehold asset amounted to S$8,983 psf based on a land area of 1,336 square feet.
Knight Frank said that prices continue to hold steady, supported by the scarcity of shophouses, their heritage value, and potential for capital preservation and appreciation.
In H1 2025, nine shophouses that changed hands posted capital gains of over 100 per cent, with the top five achieving more than 200 per cent. The strongest return was from 63 Arab Street, which sold for S$7.7 million in May – a 600 per cent gain after being held for 23 years.
Looking ahead, Knight Frank expects a slowdown in the shophouse segment. Total sales volume for 2025 is projected to reach between S$700 million and S$800 million, down from S$947.8 million in 2024.
Still, investors remain optimistic with many on the lookout for opportunities in the segment. Private wealth represents patient capital and can afford to wait until price expectations align, it added.
PropNex also pointed to the defensive nature of shophouses, which are limited in supply and often in prime locations – qualities that help preserve value during periods of volatility.
The commercial property market, which includes shophouses, could see more interest as investors shift focus from residential properties, following revisions to the seller’s stamp duty (SSD) last month.
Under the revised rules, the holding period for private residential properties was extended from three to four years. SSD rates now range from 16 per cent in the first year to 4 per cent in the fourth year, with no SSD payable after that.
Commercial properties are not subject to the SSD or additional buyer’s stamp duty. “To this end, there may be an uptick in investment interest in shophouses, among investors seeking to park their wealth in alternative assets,” said PropNex.
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