In 1H2020, there were a total of 52 shophouse transactions totalling $253.2 million, a 47.1% decline from 2H2019, according to Knight Frank's Shophouse H12020 Update. Average unit price for freehold shophouses has also declined by 32.7% on a half-yearly basis to $2,692 psf on land area.

According to the report, “shophouses outside of the more popular conservation areas supported total sales volumes” in 2Q2020, indicating that demand has moved out of the traditionally popular conservation areas. For instance, there were four shophouse transactions at Sims Avenue in Geylang that fetched $2.8 million each in April.

The largest deal this year was a bulk sale of 10 shophouses at Teck Chye Terrace, which occupies around 17,700 sq ft of land. The deal fetched $39 million.

Of the shophouse transactions lodged in 2Q2020, 85% were between $1 million and $4 million. For instance, 120/A/B and 118/A/B Pasir Panjang Road changed hands for $3 million each. The report adds that investors are “hedging against the looming economic uncertainty caused by the pandemic”.

In contrast, the previous quarter saw more transactions in popular conservation areas including Little India, Kampong Glam, Tanjong Pagar and Desker Road, with almost half of the transactions priced at $4 million and above.

Despite lower sales volumes, shophouses are still seen as safe havens by investors. Some of the shophouses transacted in 1H2020 enjoyed high returns after being held for more than a decade, according to the report. A shophouse unit at 41 Duxton Road, which last transacted in 2003 for $800,000, was sold at a profit of $4.1 million, fetching $4.9 million in February.

As shophouses in Singapore are fixed in supply, “demand volume is expected to return among investors of shophouses as a means for wealth preservation, stable recurring income and the prospect of substantial capital appreciation over time,” says Mary Sai, executive director of capital markets (strata sales) at Knight Frank.