Monday, March 26, 2012

Shophouses - firm foundation for big gains

Straits Times: Mon, Mar 26
NOT only are shophouses key elements of Singapore's architectural heritage, they are increasingly coveted as investments.

Prices have been shooting up, and savvy investors who caught the wave in recent years have made huge gains.

Consultancy CBRE said the cooling measures targeted at the residential market have driven more investors, local and foreign, to look elsewhere, and the humble shophouse has come into its own.

Last year, there were 292 shophouse sales worth $1.13 billion in total - just short of the $1.17 billion transacted in 2010 but almost double the $563 million seen in 2009.

Two in three units sold last year went for $1.7 million to $5.5 million each, although larger ones changed hands at between $10 million and $12.5 million per unit.

Prices have risen sharply: In terms of land area, the median per sq ft (psf) price went up 21 per cent to $1,867 last year, against $1,547 in 2010, the report said.

'What's more surprising is that the median price for last year was 74 per cent higher than that in 2007, when Singapore's overall real estate market was at its peak,' said Ms Petra Blazkova, CBRE's head of research for Singapore and South-east Asia.

'This is a clear indication of a structural change in investors' appetite for shophouses,' she noted.

Tidy profits have been made by some of these savvy investors.

For instance, a row of five shophouses in Amoy Street was bought for $24.5 million in 2010 and sold for $34.4 million a year later. And two units at Tanjong Pagar bought for $6.5 million in 2009 were sold for $12.5 million last year - garnering a profit of 92 per cent...

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Team Marshe
Martin Koh/ Sherry Tang
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