Old is gold – the Singapore shophouse

Key industry players have indicated that the total sales value for shophouses in 2021 will likely exceed that of 2018, previously the highest year on record

THE shophouse stands in sharp contrast to the archetypal modern skyscrapers dominating Singapore's skyline. The former is a reminder of Singapore's somewhat forgotten, humble past dating back to the colonial era and the latter the representation of modern metropolitan Singapore.

The shophouse continues to steal the limelight from the modern skyscrapers, which have, for majority of the time during the Covid-19 pandemic, been rendered lonely, unoccupied monoliths. There was a signifi cant increase (29.9 per cent) in the volume of shophouse transactions in the fi rst half of 2021 in comparison to the second half of 2020.

Key industry players have also indicated that the total sales value for shophouses in 2021 will likely exceed that of 2018, previously the highest year on record. This is contrasted with the falling demand for offi ce space in Grade A buildings, where vacancy rates continue to rise.

So why does the humble shophouse shine bright as an asset class for real estate investors in Singapore? One reason is of course its rarity. The Urban Redevelopment Authority (URA) has only accorded approximately 6,500 shophouses in Singapore with conservation status, making this class of property extremely rare. Shophouses are only granted "conservation status" if they possess distinctive architectural features which are of historical and cultural signifi cance.

Secondly, location is the key to valuable real estate. Concentrated in the following areas of Chinatown, Tanjong Pagar, Boat Quay/Raffl es Place and Katong, conservation shophouses are usually located within a stone's throw away from the central business district (CBD), as well as historic districts and gentrifying areas in Singapore.

Due to their prime location and approved commercial use, conservation shophouses offer a viable alternative as offi ce space, especially so for family offi ces, a fast-growing trend in Singapore, and companies in the creative industries. They also tend to be near essential transport nodes and services, and the convenience that comes with a Grade A offi ce space isn't sacrifi ced.

The self-contained confi guration of a shophouse space is also attractive. This would explain the recent uptake in sales and rental volumes of shophouses located near the CBD and gentrifying districts in Singapore.


Notwithstanding the slight dip in average unit price of freehold shophouses during the fi rst half of 2021, prices are reported to still be approximately 59.5 per cent higher than the fi rst half of 2020, at the onset of the Covid-19 pandemic.

Shophouses continue to hold value and maintain their track record of relatively high capital gain in the past 20 years.

For example, we understand that a shophouse on Duxton Road was purchased in 2003 for S$800,000 and sold in 2020 for S$4.9 million). It is no wonder interest in this class of real estate continues to remain robust.

Another key feature of shophouses is the fl exible nature of its approved use in comparison to the modern offi ce buildings, which are often single use in nature. A large proportion of shophouses, especially those located around the CBD, such as Duxton Hill, Tanjong Pagar and Circular Road, continue to be used as offi ces, hostels, gyms and food and beverage establishments.

Then there is the ability for foreign persons to currently own shophouses which are approved for mixed commercial and residential use and which are erected on land either zoned for "commercial" and/or "commercial and residential" use.

However, foreign persons (including Singapore Permanent Residents) are prohibited from purchasing shophouses which are erected on land zoned purely for residential purposes only in the Master Plan, subject to written approval from the Land Dealings Authority Unit.

Despite all that glitters, potential investors are urged to do their due diligence before jumping in, as they should consider stamp duty, restriction on renovation and use restrictions.


Under Singapore law, purchasers of Singapore real estate (including shophouses) are required to pay Buyer's Stamp Duty on the purchase price of the shophouse or the market value of the shophouse (as determined by the Inland Revenue Authority of Singapore), whichever is higher.

As shophouses may be erected on land zoned for residential purposes and/or approved for residential use, Additional Buyer's Stamp Duty of up to the headline 25 per cent rate would be applicable on the residential portions of the shophouse.

Potential buyers should approach their property consultants to confi rm permitted restrictions on renovation. As conservation shophouses feature unique architectural features, which the Singapore authorities are seeking to preserve, conservation shophouse owners are required to seek written approval from the URA and the Building and Construction Authority of Singapore prior to commencing any internal and external renovations, additions and/or alterations to the conservation shophouses. This may range from the placement and installation of signage and air-conditioning units, to the external painting of the building.

If the intended use of the shophouse falls outside the government-sanctioned approved use of the property, the registered proprietor may apply to the relevant government authorities to change the use of the whole or the relevant part of the shophouse.

For example, the registered proprietor may apply for the change of use of the fi rst fl oor of a shophouse from gym and/or fi tness studio use to use as an offi ce space. The authorities have the discretion to reject such applications, and it would be prudent for potential purchasers to perform suffi cient due diligence before securing the sale contract.

Offering the best of the new and old worlds, the value of shophouses may continue to rise even during an unprecedented global pandemic, reminding us that when it comes to investments, sometimes old is gold. However, in search of the treasures of our heritage, potential investors are advised to dig a little deeper beyond the surface to understand and/or abate any potential legal, regulatory or technical pitfalls along the way. w

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