Singapore’s luxury housing market epitomises elegance, sophistication, and exclusivity, drawing the attention of high-net-worth individuals and global investors alike. The fusion of opulence with an exceptional quality of life, coupled with a thriving yet stable economy, positions Singapore’s luxury real estate market as the ultimate destination for both local and international buyers.

From prestigious condominiums and exclusive highrise penthouse apartments to exclusive gated communities that accommodate Singapore’s finest bungalows, the city-state presents a diverse array of high-end, lavish properties to cater to discerning buyers.

In this article, we embark on a captivating journey through some of Singapore’s most sought-after and upscale residential areas and properties. We will delve into the distinctive features that set these properties apart and make them alluring to buyers worldwide.

Key Characteristics: What Makes Luxury Properties Stand Out?

There are a number of characteristics that collectively contribute to the allure, desirability and exclusivity of luxury real estate in Singapore. Properties that possess some or all of these factors can offer residents a prestigious address, a status symbol, exceptional amenities and benefits, and an overall elevated quality of living. 

Let’s go over them.

Prime Location

Luxury properties in Singapore are typically situated in prime locations including prestigious districts and waterfront areas. Properties in these areas are highly sought-after addresses as they offer convenience, exclusivity, and proximity to business districts and entertainment hubs. Rightfully so, as the price tag of these properties will need to match up to the lifestyle of those who are able to afford them. 

Space

Luxury real estate in Singapore offers residents ample space in their homes. This is made possible by features such as large living rooms, spacious bedrooms, walk-in closets, multiple bathrooms and a layout that provides extra space for large functional rooms in the house. 

The layout and design of luxury homes may prioritise open floor plans, high ceilings, and outdoor spaces like balconies and terraces that paint the picture of grandeur and create a seamless flow between the different areas of the house.     

As it is a known fact that space in Singapore is scarce, the provision of ample space in real estate aligns with the desire for exclusivity at a premium price.  

Design and Architecture

Another characteristic that distinguishes luxury properties in Singapore is the design and architecture. These luxury properties are designed and built with high-quality materials and have exceptional and innovative architectural features that create a sense of opulence and sophistication. 

These features may include intricate and unique facades, smart home technology, spacious living areas and an open floor layout as we mentioned in the point above, and eco-friendly appliances in the house. More commonly found these days are also concierge services provided to the residents which includes pet pick ups for grooming sessions or hire services for daily cleaning. 

High-end Amenities

Homebuyers who invest in luxury real estate not only get a property that is visually appealing and built with materials of the highest quality, but they also gain access to a range of exclusive amenities. 

This includes private clubs, residents-only lounges, private theatres, spa facilities and luxurious, modern fitness centres amongst many other facilities and amenities. 

High-End Residential Areas

Singapore has various upscale residential areas known for their luxurious properties, exclusive features, and desirable amenities. Here are a few of the high-end residential areas in Singapore:  

Districts 9 & 10

Districts 9 and 10 are renowned for their upscale residential areas that provide residents with a luxurious living experience. These areas comprise various neighbourhoods with access to fine dining, top-notch entertainment and leisure activities, and unique amenities that provide residents with a prestigious status and living experience that is unparalleled. 

District 9 is one of Singapore’s prime residential areas as it is situated in the city’s centre and is in close proximity to the Orchard belt, the country’s shopping hub. The district encompasses various neighbourhoods including Orchard, Cairnhill, Leonie Hill, and River Valley. This location boasts the country’s most upscale condominiums and apartments.

District 10, conversely, is characterised by its serene environment, lush greenery, spacious properties and prestigious neighbourhoods. Neighbourhoods in District 10 include Bukit Timah, Tanglin, and  Holland. Moreover, Nassim Road, Singapore’s most coveted luxury area, is also situated in District 10. These neighbourhoods are known for their upscale and luxurious landed properties like good class bungalows (GCBs). 

Each of these areas comes with its unique charm and offers amenities and benefits that cater to the personal preferences of residents who seek a luxurious lifestyle. While District 9 and 10 are known for their luxury housing offerings, Singapore has a range of other upscale areas with condo developments and landed properties that cater to residents seeking a luxurious living experience. Some other upscale areas with residential properties include, but are not limited to, Sentosa Cove in District 4, Marina Bay in District 1, and Novena in District 11.  

Luxury Properties In Singapore: A Closer Look

Ritz-Carlton Residences

The Ritz-Carlton Residences is a freehold luxury apartment development completed in 2011. The development is located on Cairnhill Road in District 9, in a prime area that is in close proximity to Orchard Road. This project is a collaboration between the luxury hotel brand, The Ritz-Carlton, and the well-known developer, KOP Properties. 

With 58 units in total, The Ritz-Carlton Residences offers a collection of luxurious apartments and penthouses ranging from 3-bedders, 4-bedders, and junior and mega penthouses on the 36th storey. If you are interested in a virtual tour of the development, check out our home tour with Melvin and Adrian here. 

On top of the prestigious, upscale apartment units, residents have access to a comprehensive range of amenities and services such as laundry and housekeeping services, car parks, and 24-hour concierge and butler services. In addition, residents can also access facilities like a wellness centre with spa treatments, swimming pool, and fitness centre. Moreover, with all of these high-end facilities and amenities, residents get to enjoy the luxury that is associated with The Ritz-Carlton brand, known to provide guests and residents with unparalleled and exceptional living experience. 

GCB at 33 Nassim Road

Nassim Road is known for its exclusive and prestigious properties ranging from condominiums, landed homes, and luxury good class bungalows (GCB). These properties are highly sought-after by locals and foreigners due to their expansive land size, privacy and proximity to prime areas of Singapore. In fact, they are considered to be some of the most exclusive and valuable properties in Singapore, and command exceptionally high prices. GCBs are typically characterised by their large land plots which have plenty of room for building amenities and landscapes with lush greenery. Check out our previous article on GCBs and their pricing in different regions of Singapore here.

This article wouldn’t be complete without a mention of this high-end property in Singapore, as it was a home that made the news in 2019 when it was first sold for the highest price to date. According to an article by Business Times, Wing Tai Holdings chairman Cheng Wai Kung sold a 84,543 square feet GCB at 33 Nassim Road for $230 million in 2019, with the price reflecting $2,721 per square foot.  

The land plot for this property is a rectangular shaped plot and has nearly 100 metres of road frontage. Moreover, it has enough space to be redeveloped into five smaller bungalows of approximately 20,000 square feet each. The two-storey mansion also features a swimming pool, tennis court and garden. 

Landed Homes on Mount Rosie Road

Fraxter Capital is developing three new freehold landed properties on Mount Rosie Road in District 11 that are set to be completed in 2024. These three luxurious homes are part of the Mount Rosie Collection priced at approximately $26.8 million. 

25 Mount Rosie Road is a 3.5-storey inter-terrace house with a 5-bedroom and 5-bathroom configuration. Along with an elegant roof terrace, the house features a spacious courtyard area and a parking area that can accommodate 3 cars. 

23 Mount Rosie Road has a similar configuration to 25 Mount Rosie Road and comes with a basement and attic. However, this house can accommodate more than 3 cars in the 13m wide plot and has open roof terraces in the front and backside of the house. 

Finally, 21 Mount Rosie Road is a detached bungalow that has 8-bed and bath configuration and a secondary living and dining area, making it the largest of the three properties. This house comes with basement parking that can accommodate 6 cars, a swimming pool, attic and a balcony that connects all bedrooms.   

Each of these houses are North-west facing and surrounded by lush greenery and black and white bungalows situated at the Goldhill Enclave. They are also in close proximity to shopping malls, healthcare facilities and will offer residents easy access to major roads in the city. Check out our virtual tour of the properties with Cheryl and YanYan here.   

Closing Thoughts

Singapore offers a plethora of high-end, luxury properties that cater to individuals and families seeking a luxurious lifestyle. From prestigious addresses of District 9 and 10 to homes situated amidst greenery in different neighbourhoods throughout the city, Singapore showcases a diverse range of upscale housing options for both locals and foreigners. These luxurious properties put an emphasis on spaciousness, cutting-edge technology and home appliances, sustainable features and exceptional first-class amenities. 

If you enjoyed exploring the various luxurious properties we went over today, and would like to see more, check out Prestige by PLB for our current listings for properties on the luxury real estate market. 

If you are looking to expand your property portfolio and have any questions or concerns, feel free to contact us here and get connected with experts to assist you on your property journey. 

The post Luxury Living: Exploring High-End Properties in Singapore appeared first on Insights by PropertyLimBrothers.

Penthouses are the ultimate symbol of luxury and exclusivity in the real estate world, offering spacious living quarters, stunning views, and top-of-the-line amenities. These luxurious units are typically located on the top floor of a building and offer a unique living experience that is unmatched by any other type of apartment. In this article, we will focus on 8 different types of penthouses and share more about how the floor plans make a difference.

When looking for the right penthouse to fit your needs, some important features come to mind. Accessibility matters. This is important in future-proofing the home for your mobility needs in the future. It also caters to multi-generational families with elderly staying with them. The Indoor-Outdoor mix in the floor plan is also an important factor when it comes to the preference of buyers. 

Not only that, but where the outdoor space is located in the floor plan will determine how these spaces are being used. Having the space and option for private facilities like a gym, swimming pool, or garden within your own apartment space is also an important factor. Finally, having the flexibility to design the penthouse space around your lifestyle is crucial. Different types of penthouses offer a varying range of flexibility to create child-friendly or party-friendly homes.

We will be covering how these 8 different types of penthouses differ in terms of their accessibility, indoor-outdoor mix, option for private facilities, and design flexibility. These are some of the important (but not all) of the factors that you should consider when analysing penthouses and their floor plans.

Singapore is home to a wide variety of penthouses, each catering to different preferences and budgets. Here is a closer look at some of the most popular types of penthouses in Singapore.

Single Floor Plate Penthouses

Penthouses with a single floor plate refer to penthouses that span the entire top floor of the stack. Being a single floor unit, there are no stairways in the penthouse, making it very accessible for elderly and users with mobility issues. These penthouses may have a private lift. If that is so, do note that the lift foyer is part of the square footage of the penthouse.

These homes are a great choice for multi-generational households that want to have the family live all on a single floor plate. Making an excellent choice for closely-knit families that love to spend more time together. Single floor plate penthouses mostly have open layouts with great cross ventilation due to their single-loading style. It will have both the front and back facing of the stack, allowing wind to pass through unhindered.

Due to the single floor plate nature, most of these types of penthouses have their outdoor space in the form of balconies attached to the common living area or to the bedrooms, allowing for cosy outdoor spaces in both private and family settings. Some examples of this type of penthouse are The Ansley and Metropolitan.

High Ceiling Single Floor Penthouses

As penthouses evolve through time, more recent penthouses have high ceiling single floor plates. These penthouses are a result of rising land, construction, and en bloc costs. Developers then focus on a quantum play to keep the quantum price of the property palatable for new homebuyers. This includes the penthouse units as well.

These newer editions should not be interpreted as inferior just because they occupy a single floor plate. In fact, one unique feature that developers choose to add for these newer forms of penthouse is a high ceiling. The 4.5 to 5 metre tall ceilings give homeowners the flexibility to create 5 square metres of loft space, usually in the common living area or in the master bedroom. Some examples of this include Parc Riviera and Privé.

Duplex Penthouses with a Blank Roof Concept

Duplex penthouses are two-story units that offer plenty of space and privacy. The added space and privacy of a duplex penthouse make it an attractive option for those who want a little more room to spread out. It also gives homeowners more room to host friends and family for social gatherings, with more space partitioning flexibility as compared to single floor plate penthouses.

For duplex penthouses with a blank roof concept, all the living space is concentrated on the first floor. This means that the common living spaces, kitchens, bathrooms, and bedrooms are located on the first floor. The second floor is the blank roof, which is an outdoor space that homeowners can use for social gatherings, barbecues, gardening, exercising, and many more activities. This is a flexible space for homeowners to design how they wish to interact with the great outdoors. 

This type of duplex usually comes with either an internal or external staircase. Depending on the preferences of the homeowner, this choice might be important when it comes to accessing outdoor spaces. Some prefer indoor staircases for safety, maintenance, and wet weather reasons. While others prefer the staircase to not take up the indoor space that they have. Examples of these penthouses include Thomson Three, Austville, and A Treasure Trove.

As for renovations on the blank roof, homeowners would need MCST permission for the installation of shelters. Typically, these shelters should have no solid load bearing. Sometimes, the Management Corporation Strata Title (MCST) could refer you to the Building and Construction Authority (BCA) for more additional information on the renovation guidelines. You will need permission from these parties if you intend to increase the Gross Floor Area (GFA) of your home whilst renovating the blank roof.

Duplex Penthouses with Two Floors of Liveable Space

Duplex Penthouses with two floors of liveable space are a classic and traditional type of penthouse. Often, the two floor plates are balanced or complement each other. Like all other penthouses, the duplex takes up the top two floors of the stack. Typically, we will see the first floor of the duplex used for living space, while the second floor is a mix of indoor and outdoor space. However, unlike the blank roof concept, classic duplexes with two floors of liveable space will have their second floor with build-up space. 

An example of this type of Penthouse is CityLife. The first floor is a great mix of living space and common space for guests. While the second floor holds the master bedroom with a nice and long balcony space. On the other end of the second floor, we also have the roof terrace and powder room, making it a great outdoor space to host guests.

As the conventional image of a proper penthouse, they can look amazing when done right. Duplexes offer more than just double the floorspace of an average condominium unit. Intermixing indoor and outdoor space gives the home a refreshing feel, throwing the idea of claustrophobia out of the window.

Dual Key Duplex Penthouses

Dual key penthouses are a type of residential property that consists of two separate units within the same property. These units are typically arranged over two levels, with one unit located on the lower level and the other on the upper level. In Singapore, dual key duplex penthouses are popular among families and individuals who want the space and privacy of a penthouse, but with the added convenience of having two separate units within the same property, giving it a strong rental potential.

As an investment choice, they give homeowners the flexibility to rent out one of the units when their children have moved out. This is possible by having separate entrances for both levels of the duplex penthouse. Often, lift access would be available for both floors of the penthouse. Hence, the term “dual key”. These penthouses are a more specific subset of duplexes with the feature of having separate entrances for both floors of the penthouse.

Maisonette Style Duplex Penthouses

Maisonette penthouses are a type of residential property that consists of two or more floors, sometimes with a separate entrance for each level. They are similar to duplex penthouses in that they offer multiple levels of living space within the same property.

This is a unique subset of duplex penthouses. In the example of Palm Spring above, these styles of penthouses might have a more traditional take on outdoor spaces in the form of balconies attached to bedrooms. Some Maisonette penthouses might also have lift access to both floors, which is not that common among penthouses. 

This is an extremely convenient option for families to partition living and common spaces. Having social gatherings without disturbing the kids, or having the kids be able to have direct access to their bedrooms and bathrooms after taking a dip in the pool can save homeowners a lot of headaches when it comes to keeping the spaces well-partitioned.

Triplex Penthouses

Triplex penthouses are a type of residential property that consists of three levels within the same building. These properties are typically arranged over three floors. Triplex penthouses are similar to duplex and maisonette penthouses in that they offer multiple levels of living space within the same property. However, triplex penthouses differ in that they have three levels rather than two. This allows for even more space and privacy, as well as the convenience of having multiple levels within the same property.

The unique selling point of Triplexes, other than the obvious differences in square footage, is that they are a rare asset in today’s real estate market. These triplex penthouses are few and far between, with most of them being prized collections in high-net worth portfolios. In Singapore, triplex penthouses are relatively rare, but there are a few examples of these properties in the city. Here are a few examples of triplex penthouses in Singapore: Wallich Residence, Ris Grandeur, Helios Residences, Nouvel 18 and Skyline.

Ris Grandeur is an example of a Triplex penthouse in Singapore. With plenty of living space to offer, this penthouse offers two floors of living space with one floor for outdoor use. Its layout shows us how the bedrooms can be spaced out across different floors, giving a more balanced and mirrored floor plan rather than partitioning the floors by what it is used for.

While there is a lot of room for owners to customise the design of their home, not all triplexes come with private lift access to every floor. In this case, occupants would still have to use the stairwell to access the different floors. This type of penthouse might have an amazing amount of space but the slight dip in accessibility affects the quality of living for elderly members of the family.

Overall, triplex penthouses in Singapore are a rare and highly coveted type of residential property. The three floors of space give homeowners greater flexibility to partition their bedrooms, indoor and outdoor common spaces.

Luxury Penthouses

These are the most luxurious and expensive penthouses in Singapore, often found in high-end condominiums and offering panoramic views of the city skyline. Luxury penthouses typically come with private pools, rooftop gardens, private lifts, unique layouts and other lavish amenities. These units are ideal for those who want the ultimate in luxury and exclusivity. 

They are typically found in a central location with a unique layout. Here are some examples of luxury penthouses: SilverSea, Scotts Tower, Starlight Suites Triplex, Beaverton Court Triplex, D’Leedon Duplex, Tate Residences Triplex. Among luxury penthouses such as these, they are available in many forms, from triplex to duplex and single floor plate penthouses. 

Here is an example of a luxury triplex from Tate Residences. With a private pool and lounge on the third floor, the first two floors of the penthouse offer a tremendous amount of living space. This offers luscious living even for multi-generational families, with private lifts giving easy access to each floor without having to laboriously climb up the stairs.

Luxury Triplexes give owners the opportunity to truly design their dream homes. With a comparable amount of space to some landed properties, the ability to customise the home is unparalleled. This category of penthouses also gives owners a greater indoor space mix. With an additional floor compared to duplexes, the amount of built-up space for indoor use is plenty. The sheer amount of space in luxury triplexes would also mean that outdoor space is not compromised simply because owners want to have more indoor space.

The important factor that strings these penthouses together is not just the price tag but the exclusivity and the centrality of the property. These luxury penthouses offer a unique combination of space, privacy, and luxurious amenities, making them an ideal choice for families and individuals looking for the ultimate high-end living.

Final Thoughts

Regardless of the type of penthouse you choose, you can expect to enjoy top-of-the-line finishes, luxurious amenities, and stunning views in any of these luxurious apartment units in Singapore. Some common amenities found in penthouses include private pools, rooftop gardens, and private elevators.

In addition to the luxurious amenities, penthouses also offer a unique living experience that is unmatched by any other type of apartment. The top-floor location of penthouses typically means that they offer stunning views of the surrounding area, including the city skyline and the surrounding natural beauty. These units are also typically more secluded and private, offering a sense of exclusivity and serenity that is hard to find in other types of apartments.

Despite their luxurious nature, penthouses in Singapore are not out of reach for many buyers. There is a wide range of penthouses available at different price points, making it possible for a variety of buyers to experience the luxurious living experience that penthouses have to offer.

Penthouses in Singapore are also a popular choice for investors, as they offer a unique and desirable living experience that is highly sought after by renters. The combination of luxurious amenities and stunning views has distinguished penthouses as a class of property on its own.

If you wish to find out more about the penthouses on the market right now, and if any of them suit your needs and preferences, reach out to us here! 

The post 8 Different Types of Penthouses You Should Know appeared first on Insights by PropertyLimBrothers.

Shophouses are unique properties in Singapore with a charming blend of traditional and modern architecture and can possess both residential and commercial attributes. Conservation shophouses have long been a prominent feature of our urban landscape, particularly in conserved districts. They can typically be found in prime locations in the city. They are often used as office spaces by startups and SMEs who prefer to be near or within the Central Business District (CBD) but cannot afford to rent traditional offices.

Like traditional landed properties, shophouses usually have multiple storeys, so the build-up size ranges depending on the number of storeys. The ground level of most shophouses is traditionally used as commercial spaces for business operations. In contrast, the top floors are used for residential, but some are fully residential or fully commercial. This means that the advantage of owning a shophouse as an investor will naturally be the tenant pool – owners can rent out the space for both residential and commercial purposes.

The potential of shophouses is often overlooked, even though they are excellent financial assets and a piece of Singapore’s cultural heritage. One of the main selling points of shophouses is that most are freehold in tenure, allowing owners to ride through property market cycles without being impacted by lease decay.

Over the past few months, we have seen reports documenting shophouse transactions reaping remarkable profits. An example is a Kitchener Road freehold shophouse that netted a S$3.7m profit just five months after it was bought – a signal that demand for such properties is rising.

In this article, we will review the top 5 residential shophouses you can find in the market now. If you’re looking to expand your property portfolio and are considering these prestigious heritage buildings, this article might come in handy. Let’s dive right in.

*This list is not in any particular order.

1. Katong & Joo Chiat Conservation Shophouses

The Katong and Joo Chiat area houses a large cluster of distinctive shophouses steeped in Peranakan heritage. Locals and tourists alike are drawn to the area since it is a unique aspect of this district’s character and an ‘Instagrammable’ location with many great local cuisines. Furthermore, its proximity to East Coast Park makes the area desirable among locals and expats.

We have previously looked at District 15’s shophouses as a whole and analysed how the district’s reputation as a food paradise and cultural hotspot impacted the shophouses’ rentability and performance. We noted that the URA had gazetted the majority of the shophouses in the neighbourhood for conservation to preserve the region’s distinctive architectural heritage.

At the time of writing, there were only two such listings on PropertyGuru.

Both are conservation shophouses with at least two storeys and a built-up size of 2000 sqft, with an asking price of S$3.2m and S$4.2m. What we like about these shophouses is the myriad of amenities in the vicinity and the accessibility to major expressways. Surrounded by F&B shophouses and close to shopping malls in the Paya Lebar cluster, there will not be a lack of dining options. Major expressways nearby like the ECP, KPE and PIE make it a 12-minute drive to CBD and a 14-minute drive to Changi Airport.

With their rarity and freehold conserved status, the district’s abundance of amenities, and its proximity to East Coast, the shophouses in this area deserve a spot in this top 5 list.

2. Geylang Shophouses

Geylang is another area that is known for its shophouses. The shophouses here blend Chinese, Malay, and European architectural styles, with intricate details and ornamentation on the façades. They are painted in bright colours, adding to the district’s vibrant and lively atmosphere.

Geylang is also known for its cultural diversity and mix of residential, commercial, and industrial buildings. It is a melting pot of different cultures and cuisines, with various food stalls and restaurants offering a wide range of dishes from different parts of the world.

The shophouses in Geylang are not just a popular tourist attraction but also an integral part of the community. Many have been converted into small businesses, such as laundromats, hair salons, and cafes.

Despite the rapid modernisation of Singapore, the shophouses have retained their charm and character, making them a popular destination for locals and tourists alike.

We have previously covered D14 shophouses in Geylang and analysed whether they are suitable investments for those planning to expand their property portfolio. At the time of writing, there are a variety of Geylang shophouses listed on the market, ranging from a ground floor residential shophouse at 1,630 sqft asking for S$2.5m to a pair of conservation shophouses with a land size of 3,000 sqft and built-up size of 9,000 sqft asking for S$24m.

With its proximity to the CBD and its reputation as a food haven, rental demand is exceptionally high as these shophouses attract a wide range of tenant profiles, making the shophouses here ideal for investment.

3. Niven Road Shophouses

Niven Road is located just off Selegie Road, with a myriad of amenities in the vicinity and is known for its historical shophouses.

In recent years, the shophouses on Niven Road have been transformed, with many of them becoming trendy cafes, boutique stores, and art galleries. Despite the modern facelift, these shophouses have retained their historic charm and character.

At the time of writing, very few shophouses here are listed on the market, signalling its rarity and how owners would usually hold onto these heritage properties.

One of the conservation shophouses listed is a freehold residential property that our PLB Inside Sales Team is currently marketing. It sits on a land size of 1,249 sqft and a built-up size of 2,077 sqft, asking for S$5.7m at S$4,563 psf. The newly renovated 2-storey conservation shophouse has 2 ensuite bedrooms, an office space, and a courtyard for natural light and ventilation. It is tastefully designed to suit families, especially those who need an office space to work from home. If you’re interested in the unit, do drop our Listing Managers a message via the listing.

4. Blair Plain Conservation Shophouses

Blair Plain shophouses are a unique and attractive feature of Singapore’s architectural landscape. Located in the heart of the city, these heritage buildings have a rich history and cultural significance.

Most of them were built in the 19th century when Singapore was rapidly modernising and industrialising. They were designed in the traditional style of the Peranakan culture, which is a blend of Chinese, Malay, and European influences.

The shophouses are typically two or three stories tall, with a narrow frontage and a deep interior. They were initially used as residential and commercial spaces, with the ground floor as a shop or business and the upper floors as living quarters. Today, many of the shophouses have been renovated and repurposed as restaurants, cafes, and boutique hotels.

One of the most striking features of the shophouses here is their colourful and ornate facades. The buildings are adorned with intricate details and patterns, such as ceramic tiles, carved woodwork, and painted murals. These decorations reflect the cultural influences of the Peranakan people and give the shophouses a distinct and vibrant appearance.

The shophouses here are more than just a pretty face, however. They are also a testament to Singapore’s history and the Peranakan community’s role in shaping its identity. Many of these buildings have been restored and preserved as part of Singapore’s efforts to maintain its cultural heritage.

Visitors to these shophouses can take a stroll down the street and appreciate the beauty and history of these iconic buildings. Many shophouses have been converted into restaurants and cafes, offering a chance to sample some of Singapore’s delicious local cuisine. Others have been turned into boutique hotels, providing a unique and authentic experience for travellers looking to immerse themselves in Singapore’s culture and history.

At the time of writing, we noticed that few shophouses here are being sold on the market. The two listings currently on the market are conservation shophouses that have been tastefully restored and renovated to retain the historic feel of such properties while having a modern and trendy interior. The asking price of these shophouses is around S$7m at roughly S$3,500 psf.

With its proximity to many amenities and the CBD, rental demand will also be strong among locals and expats that wish to rent a place to stay closer to town.

5. River Valley Conservation Shophouses

Perhaps the most luxurious location on this list, River Valley is home to many iconic landmarks and attractions, including the Singapore River, Clarke Quay, and Boat Quay. These areas are famous for their lively nightlife, with numerous restaurants, bars, and clubs. It is also home to the famous Singapore River Cruise, which offers guided tours of the river and its surroundings.

The River Valley area is also home to several shopping districts, including Orchard Road and Great World City. These areas are renowned for their wide range of shopping options, from high-end luxury brands to local boutiques.

Shophouses in River Valley often feature a mix of traditional and modern elements, with many of them being renovated and repurposed for use as trendy cafes, bars, and restaurants. They offer a unique blend of old and new, combining these buildings’ rich history and cultural significance with modern amenities and design.

In addition to their aesthetic appeal, River Valley shophouses also have a rich history and cultural significance. Many of them date back to the 19th century when they were first built to house the businesses and homes of immigrants who had come to Singapore to work in the bustling port. Today, they are a testament to the city’s rich cultural heritage and evolution.

At the time of writing, our PLB Inside Sales Team members are marketing a 999-year leasehold conservation residential shophouse along River Valley Road. It has a land size of 1,887 sqft and a built-up size of 3,774 sqft, asking for S$8m negotiable, at S$4,239 psf. Comparing it to other similar properties currently listed in the area, which are asking for over S$5,400 psf, our unit is well-priced and tastefully designed for investors looking for a legitimate collector’s item. If you’re interested in the unit, do drop our Listing Managers a message via the listing.

Closing Thoughts

Overall, these residential shophouses offer a unique living experience in the heart of Singapore, combining the charm of traditional architecture with the convenience of modern amenities. Whether you’re looking for a historic home or a contemporary space, there’s a shophouse on the market that’s sure to meet your needs.

As Singapore’s rental rates and demand for shophouses are likely to continue climbing, what this means for potential property investors is that it is time to look out for disparities in shophouse prices and opportunities for an entry point into the segment.   

If you are curious about how shophouses can fit into your property portfolio or want a second opinion, do not hesitate to contact us! PropertyLimBrothers, always happy to show you the place.

The post Top 5 Residential Shophouses You Can Find In The Market Now appeared first on Insights by PropertyLimBrothers.

2022 has been a tumultuous year for the property market in Singapore as inflation and interest rates hit all-time highs, driving fixed home loan rates up as well. Although the market saw a fantastic showing from the Good Class Bungalow (GCB) segment in terms of both prices and transaction volume last year in 2021, the strong sales momentum has since eased. 

In this article, we look at the performance of GCBs this year and the future of this segment in 2023.

The allure of GCBs in today’s market

In land-scarce Singapore, GCBs represent less than 1% of the properties here and are extremely valuable because of their unique attributes. For instance, you must be a citizen to purchase a GCB or landed property in Singapore. The only landed properties foreigners can acquire here are those in Sentosa Cove, with LDAU approval. However, from 2012 to 2019, seven Singapore permanent residents who “made exceptional economic contributions to the Republic” were approved to purchase GCBs. 

Being mostly freehold in nature, their ability to retain value or appreciate over time serve as wealth-preservation assets. With inflation rates skyrocketing in 2022 and an impending recession, GCBs may be the best hedge against inflation since the GCB market’s pricing trend appears to be generally unaffected by economic downturns.

There are less than 3,000 GCBs found in 39 gazetted areas, so new supply is a rarity. Because of this scarcity and exclusivity, ultra-high net worth individuals (UHNWIs) continue to be attracted to the GCB segment for investment and to store their wealth.

Who are buying these highly coveted GCBs?

Older affluent professionals like lawyers, doctors, and entrepreneurs have traditionally made up the GCB buyer demographic. However, in recent years, the profile of GCB buyers has shifted to include the following:

The emergence of more young and wealthy tech entrepreneurs due to the flourishing digital economy is apparent, with several prominent transactions making the headlines. Some of these include:

The highest transacted GCB in recent years was in the highly exclusive Nassim Road – a 1964 property nicknamed LadyVale Bungalow. It was purchased by Jin Xiao Qun, wife of Nanofilm Technologies CEO Dr Shi Xu, for a whopping S$128,800,800, at S$4,005 psf. Dr Shi became a billionaire when Nanofilm Technologies was listed on the Singapore Stock Exchange last year.

In terms of psf, a Cluny Hill GCB broke the records. It was transacted last year at S$63.7m and fetched a record-breaking S$4,291 psf. According to The Business Times, the buyer was local entrepreneur Tommy Ong who founded the e-commerce marketing platform Stamped.io.

At the time of writing, the highest transacted GCB in 2022 was one at Chancery Lane, reportedly purchased for more than S$66m by Kelsey Cheng Tan, the Singaporean daughter-in-law of Chinese-Filipino tycoon Andrew Tan.

Are GCBs better than other types of luxury properties?

By now, you may be thinking: Are GCBs the only type of luxury properties for UHNWIs to store their wealth? What about super penthouses that are even rarer than GCBs? Can they be the culmination of real estate in Singapore?

Super penthouses are at least 10,000 sqft in size, sitting atop superstructures made up of simplex, duplex or triplex levels. They usually come with private lifts with direct access to the units, with plenty of other amenities such as entertainment areas and private pools. They are also highly coveted, with the panoramic views they provide being a huge plus point.

If we look at the volume of transactions, super penthouses are rarer than GCBs, with only ten transactions in the past 16 years and only eight up for sale in 2022. We have previously covered the topic of which between the two is the superior asset class in Singapore. To further examine this, let’s look at a case study.

In July 2019, James Dyson, the billionaire founder of Dyson Ltd, splashed a whopping S$73.8m or S$3,496 psf on a three-storey super penthouse at Wallich Residence. It was the highest, biggest, and most expensive penthouse transaction recorded in Singapore. Barely six months later, Dyson made the headlines again when he made a second luxury property purchase – a S$50m GCB at the prestigious Nassim Road.

Because of the strict regulations, many foreign investors who cannot buy a GCB naturally gravitate towards super penthouses or landed properties at Sentosa Cove. It is rare to have such an interesting case study where someone acquired both a GCB and a super penthouse. However, it was the latter that Dyson eventually let go of, just one year after the purchase and incurring a massive loss of S$11.8m (plus an additional 8% of Seller’s Stamp Duty for selling the property in the second year). 

While both GCBs and super penthouses are in a league of their own, what sets them apart ultimately are the strict regulations (on GCBs) and the nature of their tenures. Most GCBs are freehold, but super penthouses are mostly 99-year leasehold projects. In terms of legacy planning and passing on wealth to the next generation, freehold properties have the edge over leasehold ones. That is not to say that super penthouses are less desirable, but it’s got more to do with the unique attributes, prestige, and lifestyle needs. As mentioned earlier, foreign investors cannot buy and own GCBs but can acquire super penthouses. And for Dyson, it was most likely that his super penthouse at Wallich Residence couldn’t provide the privacy he desired. It was located in the heart of the Central Business District (CBD) and was integrated with offices, hotels, and Tanjong Pagar MRT station. On the other hand, his freehold Nassim Road GCB is nestled away from the bustling CBD and requires less maintenance. 

Dyson’s decision to sell off his super penthouse at a loss while incurring Seller’s Stamp Duty (SSD) might be a good decision. Buyers with the same purchasing power are hard to come by, and waiting to clear SSD would have made the property more challenging to exit.

The Emergence of 99-year leasehold GCBs: GCBs will always be a Seller’s Market

Earlier this year, The Straits Times reported that Perennial Holdings had proposed redeveloping the 752,015 sqft Caldecott Hill site (formally Caldecott Broadcast Centre) into fifteen 99-year leasehold GCBs. The site was bought by an entity jointly owned by Perennial and its chairman, Mr Kuok Khoon Hong, in late 2020 for S$280.9m.

While 99-year leasehold GCBs are not unheard of, with a handful of existing ones in the Bukit Timah area, this development will inject a new supply of GCBs into the scarce market. This will likely create a new segment of Singaporean buyers who can enter the exclusive GCB market.

The prices of these GCBs, and whether their value will hold or appreciate as how freehold GCBs would behave, remains to be seen. However, the price gap between new leasehold and new freehold landed properties often ranges between 20 and 30%.

That said, it is a timely reminder that the GCB segment has always been a seller’s market. UHNWIs buying GCBs have the financial prowess to fund and hold onto these properties. Even with the rising inflation and interest rates, money is not a concern for these affluent buyers. Once they acquire a GCB, they are likely to hold onto it as they are in no hurry to sell it off.

This seller’s market, coupled with the unique attributes of GCBs, allows these properties to command sky-high quantum prices that cannot be rationalised. Therefore, picking out a market trend for the GCB segment is challenging.

What the future holds for GCBs from 2023 onwards

It is difficult to identify a specific trend for the GCB segment because it behaves differently than other property types in Singapore – even its landed counterparts. Previously, we covered how GCB prices have become akin to the prices of luxury branded goods, which still holds true in the market today. Individuals are willing to pay exorbitant prices to acquire one because of the status, prestige, and exclusivity of GCBs.

Looking at the market trend in the past decade, we can see that the average psf for the GCB segment has grown by 44%, climbing steeply between 2021 and 2022 on the back of strong sales momentum in 2021. 

The volume of transactions in 2021 was the highest in the past decade, recording double or more of every other year’s numbers. As expected, transaction volume dropped back to its usual numbers this year, even though the average psf spiked to an all-time high.

Most of the GCB buyers we’ve seen in recent years are from the tech sector, which experienced tremendous growth thanks to increased consumer engagement in the digital economy during the pandemic. With the number of UHNWIs in Singapore rising year-on-year and forecasted to reach 4,888 in 2025, it is not surprising that the prices of GCB have increased in tandem. 

While many industry experts expect GCB prices to remain strong, we predict that the segment will be experiencing some volatility soon. As the buyer-seller price gap continues to widen and the supply on the market gets taken up, the volume of transactions will fall drastically, which may cause some price movement for the segment. 

Nevertheless, we expect demand to remain high as UHNWIs continue to seek a piece of this highly exclusive pie.

Closing Thoughts

Call it Western influence or the Singaporean dream, to be able to buy and stay in a landed property or even a GCB remains the goal of many Singaporeans. With the status, prestige, and exclusivity of owning a GCB, it will likely remain the pinnacle and culmination of real estate in Singapore for a long time.

The fifteen 99-year leasehold GCBs at Caldecott Hill, if it comes into fruition, may be worth keeping a lookout for. New supply of GCBs in land-scarce Singapore is extremely rare. And since leasehold landed properties are usually priced at least 20% below freehold landed properties, it could very well provide a cheaper entry into the highly coveted GCB market.

While GCBs may be beyond the average Singaporean’s budget, a regular landed property or a penthouse can offer similar luxuries. If you’re on the hunt for a luxury home or looking to exit yours, feel free to contact our team — PropertyLimBrothers, always happy to show you the place. 

The post The Future for GCBs – Will it remain the culmination of real estate in Singapore? appeared first on Insights by PropertyLimBrothers.

If you are a foodie who is constantly looking for the next spot, you would most likely be aware of the reputation of Katong and Joo Chiat as Singapore’s food paradise. Famous names like the legendary Katong Laksa, Chili Crab, and other multi-ethnic cuisines in the area immediately come to mind.

With many local cuisines that Singaporeans love and enjoy located in this cluster, it is not hard to see why District 15, which Katong and Joo Chiat belong to, is one of the top choices to buy property in. Furthermore, District 15 is known for its proximity to East Coast Park, its large variety of residential options, and its concentration of freehold land.

Katong and Joo Chiat are also home to a large enclave of unique shophouses steeped in Peranakan heritage. It is a distinct part of this area’s identity and an Instagram-worthy spot that draws both locals and tourists. In this article, we will explore how the area’s status as a food paradise and cultural hotspot impacts the rentability and performance of D15 Shophouses. Do they fare better than shophouses in other regions?

History of Katong and Joo Chiat

The history of Katong and Joo Chiat dates back to the early 19th century when the area was covered with attap-roofed kampung (villages) and coconut plantations that stretched from the Geylang River to Siglap Road. 

From Geylang Serai to the sea, Joo Chiat Road was a dirt road that ran through the plantations in the 1920s. It was given that name in honour of Chew Joo Chiat, a wealthy landowner and philanthropist who acquired vast tracts of property in Katong and was dubbed the “King of Katong”.

Between the 1920s and 1930s, many families relocated east to Katong and Joo Chiat. As a result, bungalows, shophouses, and places of worship were erected, reflecting the diverse and multicultural region we know today.

Where can you find D15 Shophouses?

Although District 15 spans a large area that includes Tanjong Rhu, Amber Road, Meyer, Katong, Joo Chiat, East Coast, and Marine Parade, the shophouses here are mainly found in the Katong and Joo Chiat areas. 

Katong and Joo Chiat are famous for their vibrant shophouse façades along Koon Seng Road that feature pastel hues, ceramic Peranakan floral motifs, and geometrical tiles. To the north, you can also find a stretch of conserved shophouses with iconic green windows along Lotus @ Joo Chiat.

You will find that most of the shophouses in the area have been gazetted for conservation by the URA. In fact, more than 800 structures in the area have been conserved to protect its unique architectural heritage. In acknowledgement of the efforts made by locals to preserve their cultural history, the National Heritage Board named Joo Chiat as Singapore’s first Heritage Town in February 2011.

How do D15 Shophouses perform?

Over the past five years, prices of Shophouses in D15 have grown by 55%, an average annual growth of 11%. Most of the growth was driven by higher prices from three transactions in Q2 2022, which sold at an average of $4,056 PSF

There are 65 transactions over the five years, with the bulk (66%) coming from the pandemic and post-pandemic era. However, only ten units in District 15 were sold this year from Q1 to Q3 2022, a decline from the region’s previous two years of steady growth. The volume of transactions may be slowing down due to existing shophouse owners hanging onto their units in anticipation of increased investor interest, which would likely result in a profit, given the cultural value of the neighbourhood and the possibility for further gentrification.

Comparing D15 Shophouses to all other shophouses in Singapore, the growth of D15 shophouses slightly edges out by a margin of 17%. This could be because D15 Shophouses have a generally lower average PSF, with the highest average PSF of $4,056 recorded in Q2 2022. Even though D15 Shophouses outperformed the general shophouses segment in Q2 2020, the sector eventually bounced back strongly in Q3 2020 and has been growing steadily since. Its recent performance in Q2 2022 has also reduced the disparity gap between D15 Shophouses and the rest.

On the other hand, the rest of the commercial properties (excluding shophouses) have not seen much growth. Even though the average quantum is lower or around the same as D15 Shophouses, the growth rate of other commercial properties has been just 8% over the past five years. This means that D15 Shophouses have outperformed other commercial properties by a substantial margin of 47%, proving that finding and sticking to strong performers is more important than just going for the lowest quantum.

After all, the demand for this asset type is not expected to decline anytime soon, given the limited supply of conserved shophouses in Singapore.

Examining the success of D15 Shophouses

To understand why D15 Shophouses are performing better than other commercial properties, we first have to examine the unique selling point of the region and shophouses as a niche asset class.

As we mentioned earlier, the Katong and Joo Chiat area has a reputation for being a food paradise and a cultural hotspot. This reputation inevitably draws locals and tourists alike, thus increasing the footfall of the area in general. Shophouses in the area are in a favourable position to benefit from this. Business owners can leverage the area’s reputation by aligning their business to the appeal – in this case, F&B operators stand to gain the most. Drawn by the architectural motifs (attraction) and tasty cuisine (purpose), it is a win-win situation for businesses as foot traffic can be easily converted into sales. Hotel and co-living operators have also been acquiring shophouses to leverage the recovering hospitality sector and the active residential rental market here.

Given this potential, it is not surprising for such shophouses to be in strong demand. According to a recent article by The Business Times, shophouse rentals have extended gains in Q3 2022 as landlords price up. As rental demand and rentability increase, more shophouse owners are choosing to increase rents instead of selling their assets. This could mean a drop in the volume of transactions moving forward.

Although rental prices are typically volatile, coupled with the fact that there are much fewer rental contracts compared to the larger segments of all other shophouses and commercial properties, the rental performance for D15 Shophouses saw an impressive 33% growth from Q4 2017 to Q3 2022. This strong rental performance further solidifies the allure and potential of D15 Shophouses.

Closing Thoughts

The food culture and options, coupled with the strong architectural heritage of the Katong and Joo Chiat regions, are a potent combination of appeal for D15 Shophouses. The signature aesthetic of conservation shophouses in the D15 Koon Seng Road area also makes the area a tourist hotspot. Despite being part of the RCR area, its proximity to iconic landmarks like East Coast Park makes it desirable. 

Future developments such as the Thomson-East Coast Line (TEL) and Paya Lebar business hub are also compelling reasons to look into properties in District 15, be it for own stay or investment.

Although the disparity gap between D15 Shophouses and the rest has been reduced in Q2 2022, whether it will outperform shophouses in other regions remains to be seen as the volume of transactions will likely dip due to landlords holding and increasing rents rather than selling. With the rental market in Singapore on a hot streak, shophouse rentals are likely to continue climbing, signalling a good time to hunt for disparity and find opportunities for a good entry point. 

Despite all these positive indicators, potential commercial property investors must pay close attention to rising interest rates which can jeopardise affordability, cash flow, and profitability. With that said, the lower PSF in District 15 may provide a good entry point for some shophouses here compared to other commercial properties around Singapore. Additionally, the freehold D15 Shophouses could be the ideal strategy to weather the downturns in the real estate market without experiencing lease decay.

If you are interested in learning more about Shophouses and how they can fit into your property portfolio, feel free to contact our experts. We would be delighted to walk you through your property journey. Until then, see you in the next one.

The post Food Paradise on the Coast – Do D15 Shophouses in Katong & Joo Chiat Fare Better? appeared first on Insights by PropertyLimBrothers.

Geylang has been a happening locale with a history and a compelling story. Across the history of Singapore, these back alleys have been the start and end of many secrets. However, its time as a red light district in Singapore is close to the end. The pandemic has caused many brothels in the area to move out into other areas in Singapore. 

Perhaps what Geylang is known most for nowadays is the sinfully good food. With the reputation of Geylang in District 14 getting “cleaner”, could it possibly offer some great opportunities for residential and commercial activities? 

District 14’s close proximity to the CBD makes it an attractive location. In District 14, we can find many freehold studio suites. The Aljunied, Paya Lebar, Geylang area is home to many of such options. In this article, we will be covering Shophouses in District 14. Are they a better option now in the post-pandemic world?

Where are the actions for D14 Shophouses?

District 14 is much larger than just the Geylang area. Although it is the main area where conservation shophouses are found in the district. The Geylang Conservation Area covers most of Geylang Road. Yet, there are still a handful of shophouses along Geylang Road that are not within the conservation area and some lie deeper into the Lorongs. 

Atrium Residences also has an interesting shophouse marked on the map above. Other Shophouse areas that do not fall under a conservation status include parts of  Changi Road, Guillemard Road, Sims Avenue, Geylang Road, some Lorongs in Geylang, Jalan Kembangan, Jalan Masjid, and Jalan Ismail.

While a lot of the transactions are taking place around the Geylang area, there are also some transactions further east, near the Eunos and Kembangan areas. This includes Changi Road, Jalan Kembangan, Jalan Masjid, and Jalan Ismail. These other areas of D14 account for around a quarter of the shophouses transactions in this district.

A bulk of the transactions are still located along Geylang Road, be it conservation or not. One of the appeals of the shophouses in D14 is that an overwhelming majority of shophouses here are freehold in nature. This allows for the gradual appreciation of the commercial property without it having to suffer from lease decay.

This is one of the key selling points of the shophouses here over other commercial properties. The freehold nature is a great pairing with the rental yield strategy. Moreover, the freehold nature allows you to ride through property market cycles without suffering from lease decay. If there are bad economic conditions that depress the prices of shophouses, you would feel less pressured to sell on impulse.

Apart from the obvious economic benefits of owning a shophouse in District 14, shophouses in Geylang have its history rooted in the pre-war and colonial period. The rich heritage of shophouses is a signature aesthetic of Singapore’s developing years and offers a unique low-rise vibe that is distinct from the high-rise residential areas that we see all over Singapore.

This unique combination of perks brings together an interesting opportunity for property investors looking to invest in commercial real estate and a piece of history in itself.

How do D14 Shophouses perform?

D14 is one of the districts that have carried the performance for the Shophouse segment. Over the course of the past 7 and a half years, prices of Shophouses in D14 have grown by 195%. This is an exceptional amount of growth.  On average, this meant a simple annual growth of 26%. Do note that this is purely on the capital appreciation of the real estate and has not included the income from rents.

While the performance of D14 Shophouses has been indeed stellar, it is important to remember that a lot of the growth has been driven by much higher prices based on the transactions in Q2 2022, which sold at a record average of $4,866 psf. However, there was a low volume of 2 transactions in 2022 Q2. So this growth is largely driven by the higher prices specifically in the Geylang Conservation Area.

There are a total of 94 transactions over the 7.5 year period, but we do see a lot more transactions in the post-pandemic era as compared to before. Arguably, this is considered to be on the lower volume side of transactions. On average, there are around 3 transactions a quarter (or 1 transaction a month). This spaced out transactions might be contributing to the volatility we observe in the prices of Shophouses in D14.

Comparing D14 Shophouses to all other shophouses in Singapore, D14 shophouses have grown more than other shophouses by more than 5 fold. The impressive rise in D14 Shophouse prices may be due to the overall lower psf between D14 shophouses and the rest of the shophouse segment. In the recent Q2 performance, this disparity gap between D14 prices and the rest of the shophouse segment has been dramatically reduced.

Overall, all other commercial properties (not including shophouses) have been declining in the long term. Other commercial properties have fallen by 27% in the same span of time. This lacklustre performance in commercial properties might be disheartening to some property investors. The key to succeeding in this segment is to find the right opportunity and stick to strong performers, rather than simply buying the lowest quantum commercial properties.

Shophouses are a niche in this commercial property category that has clearly outperformed the average with a very high margin difference. With the right choice, the opportunity for capital appreciation can be massive, as shown with the D14 Shophouses example. 

That being said, past performance is not an indicator of future performance. This does not mean that you immediately go for the buy decision when we see appreciation hitting 195%. Ultimately, the most important key to success is a good strategy. Following our Disparity hunting approach when it comes to property search (be it residential or commercial), we are able to identify opportunities that have a higher potential for growth.

Why invest in D14 Shophouses?

Apart from all the attractive features we have mentioned about D14 shophouses and their performance, there are even more reasons to be interested in shophouses of this particular district. As we have mentioned earlier, a bulk of the action happens in the Geylang Conservation Area along Geylang Road. The conservation shophouses here have a keen aesthetic and there are regulations revolving around how they should be maintained and there are specific ways to renovate the property.

The URA follows the “3R” of conservation. Their principles include “Maximum Retention, Sensitive Restoration and Careful Repair”. The property should clearly retain its historical image, and the restoration and repair should be done with the spirit of preserving the heritage of Singapore.

These “constraints” are arguably more beneficial than they are limiting. Clear guidelines are given on how to go about restoring. You do not need to crack your head open on renovating the property. In addition, because this is a joint effort of all the conservation shophouse owners, the district will be able to have a unified image of the restoration. Together, this gives D14 Conservation Shophouses a unique and instagrammable front for tourists and locals alike.

Another well-known fact about District 14 is the great food that can be found in the Geylang area. Food guides posted by local foodies and bloggers introduce a world of goodness when it comes to the local food culture that can be experienced in this district. There is a wide range of local delicacies that can be found in this area. This eventually translates into footfall in the district. 

Coupled with the attractiveness of the conservation aesthetic, local food culture is able to shine together with the historical aesthetic of D14 shophouses. This is a perk for businesses looking to D14 Shophouses as rental options. For commercial property investors, who your tenants are may be an important part of your rental strategy. 

Speaking of rent, we took a look at the rental performance of D14 Shophouses against their comparables. Because of the high volatility in rental contract prices, the Quarterly Rental growth rate was -12% from 2015 to Q2 2022. This is due to the fact that there are a lot fewer rental contracts as compared to the larger segments of all other shophouses, and all other commercial properties.

The rental prices will be determined largely by the conditions of the shophouse and the relative location in D14. Nonetheless, with a strong rental strategy it is possible to score above average prices for rental income based on the upside volatility we see in the charts. This is important because rental income helps to offset the loan repayments which may grow over the next few quarters as the US FED continues to raise interest rates.

Closing Thoughts

D14 Shophouses have a clear and special combination of Unique Selling Points. The food culture and eating options in the Geylang area are enviable. Its location is considerably close to the CBD and partially in the RCR area. There is a rich history of the Geylang area which dates back to the 1840s era. The conservation shophouses also provide a signature aesthetic to these particular shophouses in the D14 Geylang Road area.

Although the high disparity gap has recently closed in the Quarter 2 transaction data, there might still be future opportunities to hunt for disparity. The long-term trend sees D14 shophouses to be priced below the average psf for Shophouses all over the country. In the future, when prices dip to the $1,500 range, it might be a great price point to hunt for disparity.

Compared to its comparables, D14 shophouses posted a solid performance with strong gains in 2022 Q2. This points to the high potential of the area when it comes to future growth. Whether or not these higher price points can be sustained will be a key thing to look out for in the shophouses segment.

Despite all these great signals, prospective commercial property investors will need to be keenly aware of the economic slowdown and rising interest rates. These macro factors might threaten affordability, cashflow, and profitability. Regardless, the lower psf in this area may offer reasonable quantums for some shophouses in this area as compared to the other commercial properties across Singapore. The freehold shophouses in D14 also present a great opportunity to ride through the troughs of the property market without suffering from lease decay.

If you wish to know more about the Shophouses Segment as an investment niche and whether it fits your property portfolio and journey, reach out to our experts here. We would be happy to guide you through this process of discovery.

The post D14 Shophouses in Geylang & Beyond — Are they Good Investments? appeared first on Insights by PropertyLimBrothers.

Should I stay or should I go? Investors and real estate veterans ask this question over and over again, about where to allocate their investable assets. Having a property portfolio consisting of overseas properties may seem like a “sophisticated” diversification move, but are you sure that is the better investment strategy?

Depending on how you look at it, diversification may or may not be the greatest strategy for managing a portfolio. But diversification for the sake of diversification might hurt your portfolio more than it does good.

In this article, we highlight the most important questions you should ask yourself or your real estate broker before seriously considering overseas property investments. We make the case for why buying Landed properties in Singapore may be a better option than overseas properties for most people. Stay tuned to find out more.

Opportunity or Red Herring?

Let’s get real, what are the benefits of buying properties overseas? Is it a real opportunity for property investors or simply another red herring? Property ownership overseas can go from being a strategic portfolio play, a casual holiday home, to a complete flop in asset allocation. The purpose for buying properties overseas should be clearly defined even before looking at listings of properties overseas.

Perhaps, what tempts most Singaporeans is that buying Landed homes here in Singapore is way too expensive. A decent piece of Landed real estate can easily go beyond S$5M into the 8 digits. With this framing, suddenly Landed properties overseas might become a very attractive idea. Be it Malaysia, Australia, or the UK, overseas Landed properties suddenly become an opportunity for locals to own their own Landed home.

While there is nothing wrong with wanting to own a status symbol or your own piece of land, when it comes to the dollars and cents, there can be a clear difference between a good and bad decision. If you are not concerned about property valuations and gain, then attaining the goal of owning Landed properties through overseas properties might not be a bad idea.

That being said, buyers need to know not to be misled by emotions when making a purchase of this size. Long-term financial considerations for the individual buyer and the family should be in the picture as well. An opportunity for someone who wants the cheapest and fastest way to own a Landed home may be a distraction to another who wants to grow their wealth.

Therefore, buyers would need to know why they want to buy a Landed home. Does buying it overseas enhance the overall prospect for the buyer? Or does buying a Landed home locally give a better risk-reward ratio while fulfilling all the needs and wants?

Here are some common examples of why people may or may not buy Landed property abroad. This list is not exhaustive, and there may well be many other personal reasons for the purchase.

What is it that you want from a Landed property? Can it be fulfilled through other means? Could it be fulfilled through local rather than overseas properties? There are specific purposes that overseas property can fulfil that are circumstantial and unique. Such as your favourite holiday spot that you plan to visit often in retirement. Or that your children are studying abroad and it makes more sense to buy than to rent (this depends as well).

An opportunity in the local market that you might have missed is that the landed property market in Singapore is protected to some extent from foreign interest. Singapore Land Authority (LDAU) approval is needed for foreign individuals and entities to purchase landed property in Singapore. Most of the time, only landed properties in Sentosa are granted LDAU approval.

The landed property market in Singapore is driven almost entirely by Singapore citizens. (Of course, foreigners that take up Singaporean citizenship are counted too). Even with the capped demand, the supply of landed homes is still rather limited. It is one of the few property classes that have better prospects for appreciation.

Landed properties also make a good option as a multi-family home. Using the Landed property as a stay-in property might also make more sense in Singapore than overseas unless you are looking to relocate along with your family.

Geopolitical Turbulence — What does it mean for Foreign Property Owners?

There are words circulating in the media of a “new international order”. What do the rising geopolitical tensions around the world mean for foreign ownership? Are we moving through a period where countries choose nationalistic isolation over international cooperation and prosperity?

A prolonged period of geopolitical tension is bad news for foreign property owners, regardless of your nationality and where you have bought your overseas property. Perhaps, it will matter more for some countries as opposed to others. But the bottom line is that the world now is a lot more uncertain.

In such environments, foreign property owners (or even local ones at that) might start to shrivel up. Given the poor macroeconomic conditions that follow, it would not be surprising to see more and more high-net-worth individuals (like celebrities) start to sell their property holdings and sit on cash.

Uncertainty across national boundaries is not an encouraging state to be in for foreign property owners. If this persists, we might see less foreign interest across the board in property markets. More focus on cash, and other assets that are not as exposed to geopolitical turbulence.

If there is something we can learn from where the world is headed, it is to be safer than sorry. Conservatism and prudence in where we put our money would matter a lot in the coming quarters. The volatility in political and financial matters will probably continue to increase.

Of course, for foreign property owners who currently have a portfolio of properties across the globe, this is not a recommendation to panic sell your entire portfolio. It is more of a cautionary word for prospective investors looking to dabble in overseas markets. It is simply not a very great time to be exploring without deep knowledge and experience in these markets.

Foreign property owners would need to reevaluate their property portfolio exposure to geopolitical risks. Should you start consolidating your portfolio and focus on holdings that you really think will succeed? Trimming off losers or high risk assets may be a smart intermediate move as the markets readjust and make sense of the turbulence.

As governments around the world focus on urgent domestic affairs such as food and energy security, we might see resources from urban development be reallocated. Rather than be carried away by promises of gentrification or development of surrounding areas, international real estate investors need to focus more on the here and now. Does the existing location and amenities justify the asking price?

Some newer international real estate investors might have been burned before. In the not-so-recent case of property investments made by Singaporeans in Malaysia Landed properties, be it Johor Bahru or Kuala Lumpur, promised developments in the area might not manifest. Businesses and savvy investors might not be as keen in the market as you are. The grass seems to be greener on the other side, but that is hardly the case when we are comparing Singapore as the base.

Singapore’s housing market fundamentals are solid. And few property markets can surpass the stability and value that can be found in our local markets. Comparing the housing markets in Singapore and Malaysia, growth in Malaysian markets has been decelerating as compared to Singapore’s recent acceleration in the post-pandemic world.

It might appear a little misleading so we need to clarify that Malaysia’s house price index is calculated on a year-on-year change basis. Whereas Singapore’s residential property index is based on the calculation against 2009 as the base year. Nonetheless, we can still see that the rate of change is going in opposite directions for the two markets.

In this example, buying into overseas property might dilute your returns and potentially expose you to uncertainty in foreign markets and their respective policy decisions. On top of this, foreign buyers should always be aware of the stamp duty situation for different countries.

This could drastically affect your decision, especially if the landed properties you’re looking for don’t come cheap. Perhaps you may not even be allowed to own landed properties there at all! It is best to do your due diligence to make sure that the market is friendly for foreign buyers.

Are the Additional Risks Justified?

Overseas properties are touted for their diversification purpose in property portfolios. But do the numbers add up? Overseas properties incur more risk than most people are willing to admit. The key benefit of diversification is to reduce the reliance on a single asset class or category in general.

In the ideal situation, diversification helps you hedge your risks and gives you a better risk-reward ratio. Let’s say all your assets are in Singapore. Your cash, stock, bonds, job, home; everything is in Singapore. If disaster hits (touch wood), all your assets will be affected. That is because underlying all those assets have one thing in common – they are all located in Singapore.

As a result, if anything happens to Singapore (good or bad), most of the assets will be correlated and move in the same direction. At least in theory. Thus, one of the ways to diversify is to go into assets which are uncorrelated to the ones you currently have. Your returns may or may not get better.

Typically, this is done by diversifying across asset classes, industries and/or countries. It works by lowering asset-specific or country specific risk. Through diversification, reliance on a single type of asset, industry or country to perform is reduced. Though, this is not entirely without tradeoffs.

In the case of buying Landed property overseas rather than locally, you reduce the country specific risk of being exposed to Singapore (people need to ask if this is necessarily a bad thing). The tradeoffs would be that your overseas Landed property will be exposed to Foreign Currency Risk, Foreign Policy Risk (the policy of the country you’re buying in), depending on the country you might also experience an increased risk of Natural Disasters, Climate Change, their country’s economic health, etc.

If these additional risks are not enough to turn you away from the decision, it should at least give you a broader sense of what you need to be aware of. You need to be very selective about your choice of overseas Landed properties. And be savvy on the actual prospects of the property’s ability to appreciate in the future.

In many other countries around the world (Europe, Asia, Americas), land scarcity is not as big an issue as it is in Singapore. The fundamentals of other real estate markets might be driven by many other factors. And you should know what those are before diving in to purchase.

Pragmatic Caretaking — Who will manage the Property Holdings?

This is ultimately the most pragmatic question on the logistics of owning an overseas property. It is also an important matter of trust. Do you plan to rent out the property to beef up the returns? Or do you intend to just hold it for your own stay even if you’re not in town? More importantly, do you have a realtor that you can trust from that country?

Purchasing properties overseas is a complicated process. Especially if you do not have a personal network that you can rely on to help you better understand the market and manage your property holdings. Having friends or family in that other country (or even having stayed there yourself for a period of time) can help assuage some concerns through the familiarity from experience.

Regardless, the issue of managing properties overseas alongside the administrative issues can be easily underestimated. Everything might look good on paper, until you get missed mails, runaway tenants, or burglaries on the table. The geographical distance from your overseas properties might be more trouble than it’s worth in scenarios where you’re new to the game.

Beyond the logistical issues of how the Landed property will be maintained and taken care of, you should ask yourself if you have the time and attention to monitor your overseas holdings. Compared to other assets, managing overseas property might not be as “passive” as it sounds.

Conclusions

The better investment strategy is the one that gets you to your destination faster. Returns are not always the indicator of “better” for the individual. It depends on why you’re actually thinking of buying overseas properties in the first place.

For those of us with the dreams of owning a Landed property one day, perhaps taking the “shortcut” and owning one overseas might be more trouble than it’s worth. Unless you have plans of relocating, or have family members planning to stay overseas, it might make little sense to dabble in such uncertain markets.

Here are some questions you ought to ask yourself if you are considering investing in overseas Landed properties.

• What is the purpose of your overseas Landed purchase?
• Can this need be met through other means (diversifying through other asset classes)?
• Are the fundamentals of the foreign property market strong?
• What are the factors that drive return in that market?
• Are there any hidden risks of your overseas Landed property investment?
• Who and how will the property be managed in reality?

If you have your own set of questions and are still unsure as to which strategy is better for you, feel free to reach out to our experts on the matter. We are more than happy to learn more about your personal situation and give you a second opinion on whether the decisions you are making fit your best interests. Until then, thank you for reading and supporting PLB Insights!

The post Buying Landed Property in Singapore vs Abroad — Which is a Better Investment Strategy? appeared first on Insights by PropertyLimBrothers.

Shophouses in Singapore host a nostalgic and sentimental spirit of the past. It reminds us of how far we have come from a fishing village to a first world city. Beyond humble beginnings, it is a functional relic that represents our heritage and identity. Particularly in the Central Business District (CBD), Shophouses stand in contrast to our modern skyscrapers. In the concrete jungle, Shophouses form the exciting leaf litter where history ferments into our present culture.

Conservation Shophouses make up the majority of shophouses found in the CBD. They are kept in distinct and strategic locations to maintain a lively and stimulating cityscape. Following URA’s city planning, Shophouses punctuated the crowded skylines of our city. They also host some of our beloved food places (especially for office workers in the CBD) and boutique offices. These dynamic pieces of history are definitely actively shaping Singapore even today.

In this article, we look at various Shophouse clusters in District 1 & 2 and take a dive into what makes Shophouses in these districts so special. Specifically, we look at six different conservation areas in district 1 and 2 where the shophouses are, and explore the beauty (& numbers) within.

Singapore’s Migrant Settlement History

Boat Quay, Kreta Ayer, Telok Ayer, Bukit Pasoh, Tanjong Pagar. These four conservation areas make up the Chinatown cluster of shophouses. This is not a formal categorisation of the shophouses in district 1 and 2. Rather, these four conservation areas are tied together with its common history of being an early settlement during the colonial period.

The history of D1/2 shophouses starts in the early 1820s, in the era of Sir Stamford Raffles. Starting with Boat Quay, the area acted as a settlement space for migrant labour. Most commonly from Chinese and Indian descent. The Telok Ayer area along the original Singapore river was also part of the early settlements in the 1820s. Can you imagine? This is actually around 200 years ago.

Over the earlier half of the 19th century into the 1860s, the Chinese settlement expanded to take up the Kreta Ayer areas. In fact, the population of migrants expanded so fast that they had to reclaim land in that area (Telok Ayer Basin) to build shophouses for both residential and commercial use.

These early settlements were typically found along the Singapore river, which acted as a conduit for trade and transportation. In some sense, early settlements in Singapore naturally adopted the mixed-use approach to real estate development. Working and living were integrated out of necessity, since transportation infrastructure and technology were not modernised yet. Interestingly, city planning today comes back to this concept of mixed-use development. We can only speculate whether it was inspired by the shophouses of old, or just a recycled concept in the city planning trends. Nonetheless, conservation shophouses today still (mostly) follow this mixed-use concept, in a modern interpretation.

A generation later, the migrant settlement in Singapore grew even more into the beginning of the 20th century. Bukit Pasoh and Tanjong Pagar were developed by the growing Chinese population on the south bank of the Singapore river. As this settlement on the south side of the Singapore river continued to develop, overcrowding and sanitation issues began to grow. 

As more migrant labour and business families moved over to Singapore, some level of wealth divide was observed. Wealthier families lived further away from the Chinatown cluster of Shophouses. Before the great cleanup of the Singapore river during the 1970s to late 1980s, you can imagine how the river looked and smelt like. Blair Plains was an example of one of the richer neighbourhoods which were located away from the main cluster of Shophouses.

The conditions of shophouses in the Chinatown cluster were worsened by the onset of war in 1942, with the area badly damaged from bombs. However, the post-independence era of Singapore beyond 1965 saw a rejuvenation of the city-state. Eventually, some Shophouses in the central regions were set aside as conservation pieces by the 1980s.

In this brief history of Shophouses in District 1 and 2, we see the history of the rich and poor, of peace and conflict. Living and working. These shophouses embody the history of Singapore before independence, and experienced the humble beginnings of our cutting-edge city. When looking at it from the perspective of numbers, investments, gains, these factors are often overlooked. 

Buying, owning, living, and working in a piece of history going so far back is definitely something beyond unique. Perhaps, we can even consider Shophouses to be functional relics, of a forgotten age of hardship and a symbol of progress.

The Fundamentals of D1/2 Shophouses Moving Forward

Looking into the future, what might be some of the reasons that Shophouses in District 1 and 2 will continue to do well? Firstly, the conservation status of Shophouses in District 1 and 2 is unlikely to be removed. Being a piece of history is technically irreplicable. It has acted as an anchor for Singapore’s riverfront development and continues to be a stronghold for Singaporean identity and heritage.

There aren’t going to be any new additions when it comes to Shophouses in the same area. The supply of new Shophouses in District 1 and 2 is likely to be locked in for the foreseeable future. The question on the future worth of Shophouses in these districts is then on the demand for these vintage spaces. Will prospects for conservation shophouses improve in the future?

Perhaps so. Co-living spaces, boutique firms, hip cafes are the typical tenants of these spaces as of late. With the bohemian vintage style becoming increasingly mainstream with the upcoming generations (Millennials and Gen Z), the demand for these unique historical pieces might grow. Not only from a rental perspective but potentially as an investment or portfolio piece.

Some younger generations might even hold living in such history pieces at an aspirational level. Co-living spaces like Figment & Cove have some residential shophouses in their portfolio (such as the one on Emerald Hill), they are in demand. It is simply difficult to afford as an individual. But as a business, it shows promise. The space alone is distinctive, and might offer some businesses a level of synergy when it comes to branding, image and status building.

The focus on culture has permeated from the national to the individual level. As a nation, conservation efforts are part of a larger move of treasuring Singapore’s heritage, identity and culture. It is accompanied by efforts in educating the Singapore populace through museums, exhibitions, festivals, and schools. Culture to the nation is a key component of building a unified people. Conserving buildings with history (such as Shophouses) will remain a symbolic step towards this end of preserving our common heritage.

For individuals, norms have gravitated towards a greater appreciation of culture. This is not just the “finer things in life” but the things in life that matter and have meaning. Over time, Singaporean society has become more reflective, affluent, and globalised. Even as we embrace influences from beyond our borders, we crave for something to call uniquely our own. Shophouses fundamentally fit the bill as a niche within the real estate industry in Singapore.

Past Performance of D1/2 Shophouses

Any sensible investor would have heard that past performance is not an indicator of future performance. Yet this simple disclaimer is unable to take into account how trends and historical price action influence the decisions of investors in the market. To say the least, how the past affects the future is complex. We look through some of the past performance of D1/2 Shophouses and its comparables, to gain a broader understanding of the long term trends in the commercial real estate space.

Generally speaking, Shophouses as a commercial property niche have outperformed other commercial properties on growth. Although all these commercial properties have seen a decent rise since 2009, there was a prolonged period of slow decline for other commercial properties from 2013. Shophouses after 2013 have seen a period of volatility and are now seeing rapid growth since the pandemic.

Compared to other Shophouses, D1/2 Shophouses in the CBD have performed astronomically well. Since 2002, D1/2 Shophouses have seen a growth of 712% by 2022 Q2. This is not without considerable volatility from 2013 to 2020. Nonetheless, this level of growth beats residential real estate in D1/2 (although this comparison isn’t exactly an apple-to-apple comparison).

Investors comparing high quantum commercial and residential real estate investments may want to know that D1/2 Shophouses have a historically higher growth rate coupled with much higher volatility. One way to think about this is that ultra high net worth investors with strong holding power really benefited from the strong growth of D1/2 shophouses in the past. Arguably, they perform much better than residential property in the rest of the CCR.

While residential property in D1/2 is not exactly a close comparable to Shophouses in the area, investors may be attracted to commercial property due to the different rules on ABSD. It gives investors more options to increase their exposure to real estate without having to incur ABSD if they choose to invest in shophouses with commercial land zoning. Though there are business risks associated with the rental market for shophouses. The prospects of rental income may be hurt if the economy or businesses in that area are not doing well. On the flip side, if there is a business with high footfall attraction, it naturally benefits other surrounding businesses in the shophouse enclave.

Regardless, D1/2 have shown strong historical performance. It surpasses the growth rate of Shophouses in other districts, other commercial real estate, and residential properties as well. However, the high quantum required to enter this niche probably deters some investors from entering this market. Investments in Shophouses can carry many deal-specific risks. The number of transactions is small, and prices can vary substantially. Location is a key factor as well as.

Because of the nature of D1/2 Shophouses, prospective investors would have to be very strategic and particular about their valuation of the property as well as their entry price. The volatility of the asset shows that there is a large variation, potentially owing to the negotiation process and the market sentiment from high net worth investors.

Zooming into just the past 3 years, the volatility of Shophouses in D1/2 obscures its growth potential. For investors highly averse to volatility, Shophouses in other districts might be easier to stomach. Prices for shophouses in other districts are climbing steadily and much faster than other residential properties. However, it might be harder to find undervalued options as compared to D1/2. The volatility in D1/2 shophouses may present some interesting value plays if prospective buyers are intune with the market and have solid understanding of shophouse valuations.

The potential of high gains can be very enticing for investors. However, investors would need to be well informed and equipped with segment-specific knowledge on the shophouse niche in order to properly navigate the volatility in this shophouse market. Being connected to the right sources of expertise will help to ascertain if shophouses fit your investment objectives and risk profile.

Closing Thoughts

Shophouses in the heart of the CBD are a distinctive part of the city’s landscape. It houses the history and heritage of Singapore. As a functional relic in modern times, Shophouses in town have retained its mixed-use nature to accommodate boutique offices, hip F&B outlets, and even co-living spaces. Eventually, we might find more innovative use of such spaces in Singapore

The fundamentals of Shophouses remain strong moving forward. Singapore has been holding on to its approach of building a strong local identity and culture. The conservation of shophouses and the preservation of this colonial heritage is a part of this larger move towards the appreciation of Singaporean history and culture.

The past performance of D1/2 Shophouses have been exceptionally strong, albeit volatile as of late. Nonetheless, it remains an exclusive niche which presents many challenges and opportunities. With the right expertise to navigate this volatile market, investors stand much to gain from this segment of the commercial real estate market. If you wish to find out more about the Shophouse segment in Singapore and how it fits into your property portfolio, contact us here.

The post History in the Heart of Town — D1/2 Shophouses appeared first on Insights by PropertyLimBrothers.

At PropertyLimBrothers, our style is to share the actual performance of the market. To clearly observe which segments have grown, and use performance data to identify the next upcoming growth segments. Our thesis on property investment is to find Disparity Gaps in the market during any particular season and go for a value play by targeting undervalued properties.

We do not have biases against or for any particular property class. Obsessing with a property-pushing strategy would hurt big picture property investment performance. Like how a technical analyst observes price action and volume, we observe which property product type will accelerate in price growth or are consolidating before moving the next leg up. Because of the cyclical nature of Singapore’s property market by segment rotation due to the upgrading demographics, every different season will see different property types behave differently in terms of demand and price action.

Our main strategy is to pick products which have a shorter and faster ROI season. We do this while taking into consideration whether it is our client’s first primary residence to balance family needs.

But if it is an investment property, then it is clear cut on studying the Disparity Gap and historical price action.

In this article, we present the following opportunity spaces: D9/10 Private Condominiums and Landed Properties with a size of greater than 3,000 sqft & Commercial Shophouses.

D9/10 Condominiums, Apartments & Landed Properties

General condos and landed properties in D9/10 have outperformed their comparables in other districts by a margin of 5-9%. Commercial and industrial properties are recovering with a growth rate of 6% since the start of 2020. In this section, we cover the luxury segment specific to district 9 and 10. This includes (D9) Orchard Road, River Valley, Cairnhill, and (D10) Tanglin Road, Farrer, Holland, Bukit Timah, Ardmore areas.

Compared to the aggregate performance for condos and landed properties, the smaller luxury properties have outperformed the baseline by 8%. On the other hand, larger properties have underperformed the baseline by 3%. Looking closer at the growth trends by percentage, we see that D9/10 luxury properties are quickly catching up to match the aggressive growth of private condos and landed properties and offer a good undervalued investment.

When we compare this to earlier data collection of the same comparisons, we actually noticed a much larger difference of 22% deviation from the baseline performance. Of course, a caveat here is that the transactions are live and being continuously added as the quarter goes on. To clear the analysis of noise, we still refer to the growth trend by percentage above. That being said, this chart shows that it is very possible to get even more undervalued investments in this space that can be at a potentially larger discount, signalling high price variance in this space.

The Landed segment is of key interest to us. We will have a follow-up article on this in the coming weeks as we take you through a deeper analysis of that part of the luxury segment.

Commercial Shophouses as an Opportunity

The second opportunity space we would like to present is the space of commercial shophouses in the backdrop of tremendous price performance of the commercial and industrial property space. Commercial shophouses have performed exceptionally well at 55% price growth since the start of the pandemic. Other commercial properties are still consolidating. Industrial real estate is recovering at a modest 8% since 2020.

This is a great example to clarify our Disparity Gap thesis. Investments made based on Disparity Gaps should have strong fundamentals and a positive long term trend. This is so that the difference in price would narrow, and the price will catch up to the true value of undervalued properties.

Buying into office, shop, medical commercial real estate is not a Disparity Gap play due to their poor long term performance. Instead of closing the price gap, macro trends indicate that this gap would widen instead. This dispersion effect will be worsened by work-from-home trends that appear to be a semi-permanent fixture in the current economy. Thus, in the commercial real estate space, we advocate for a longer term momentum play using commercial shophouses.

An important caveat here is that a small number of transactions may have skewed the observed result. Some commercial properties offer exceptional Rental Yield and growth opportunities. The cautionary word here would be to be more selective and sensitive to your choice of commercial property investment to make sure that you pick the right one.

Looking at the chart below for a broader picture of the performance of commercial and industrial real estate since 2015, we see that industrial properties have been largely stagnant and commercial properties ex shophouses have a long term downtrend. Commercial Shophouses have been the anomaly and main beneficiary of the K-shaped recovery following the pandemic (2020 onwards). You can see from the chart a sharp kink upwards for Commercial Shophouses. Again, this is more of a momentum play rather than a Disparity Gap play.

As mentioned in the previous section, the commercial space might be more attractive to foreign HNW investors due to the ABSD exemption, which can create a huge boost to capital gains. The recent ABSD increase from 20% to 30% for foreign investors of residential properties would hurt the capital gains and deter short-run speculative investment. Commercial shophouses here provide a flexible entry into the Singaporean property market. When entering, ABSD does not apply and banks are able to give 80% LTV, giving you slightly higher leverage. Furthermore, some shophouses provide flexibility to investors and are able to partially convert for residential purposes. ABSD would then be pro-rated on the residential portion and applied upon the change of use.

We believe that this class of commercial property will continue to shine through the future of work as companies downsize their usage of commercial space. The ongoing promotion of heritage preservation also plays a key role in giving some shophouses its unique selling point as a piece of history, and not just another storefront.

We have dedicated a few articles on Shophouses. Our Editorial Team has covered Shophouses as an investment property, how to select Shophouses and the transaction process, the architectural features and styles of Shophouses. We have also started a series that will cover Shophouses in specific districts in Singapore like this article.

Closing Thoughts

In this short feature article, we cover the D9/10 Luxury Segment (consisting of Condos, Apartments, Landed properties) and Commercial Shophouses as part of our journey in Editorial to explore the ideas brought up in our Quarter 1 Report. In the coming weeks, look forward to our articles as we continue to look through opportunities and ideas together.

If you have any ideas or questions that you would like answered, drop us an email or contact us here. You may also want to consider setting up a face to face meeting with our experts if you want to know how all these trends may impact your property journey.

The post Our Post-Pandemic Strategy for Luxury Property Portfolios appeared first on Insights by PropertyLimBrothers.