Demand for shophouses in the second quarter of 2025 has been relatively muted, with only 18 transactions recorded based on caveats lodged, according to PropNex’s research. This represents a 10% decrease from the previous quarter and a 14.3% decline from the same period last year.
According to PropNex, this decline is due to a continued mismatch in price expectations between buyers and sellers, as well as the uncertainty caused by sweeping trade tariffs announced by the US in April and the escalating conflict in the Middle East.
The 18 transactions recorded in the second quarter had a total sale value of $127 million, which is a 6.6% increase from the previous quarter but a 35% decrease from the same period last year.
However, PropNex notes that the actual number of shophouse sales in the first quarter of 2025 may be higher as the caveats for some transactions may not have been lodged. These include the reported sales of the 48-key boutique hotel 21 Carpenter on New Bridge Road for $100 million and the 49-key The Duxton Reserve Singapore hotel for $80 million.
Out of the 18 caveated transactions, seven took place in District 8, which covers the Little India and Jalan Besar areas. These deals had a collective value of $53.1 million. The highest caveated transaction in the last quarter was the sale of a shophouse in the Bukit Pasoh Conservation Area for $12 million in April.
Despite the decline in transactions in the second quarter of 2025, there were more big-ticket deals, with 14 shophouses selling for at least $5 million compared to nine in the previous quarter.
In terms of leasing, 800 shophouse rental contracts were signed in the second quarter of 2025, a decrease of 4.9% from the previous quarter. These contracts had a value of $8.9 million, lower than the $9.1 million recorded in the first quarter of 2025. The monthly median rental for shophouses stood at $6.68 per square foot, representing a 3.1% growth from the previous quarter but a 2.2% decrease from the same period last year.
According to a separate report by Knight Frank, a total of 42 shophouse transactions were recorded in the first half of 2025, with a value of $462.9 million. This indicates a decrease in both volume and sales value from the second half of 2024, when 50 transactions worth $520.2 million were recorded. Prices remained relatively flat, with a slight increase of 0.5% to $6,431 per square foot on land in the first half of 2025.
Knight Frank also notes that the sale of 21 Carpenter and The Duxton Reserve Singapore were the two biggest shophouse transactions in the first half of 2025. The firm’s executive director for capital markets, Mary Sai, observes that with the F&B sector facing challenges, there is a growing interest in living sector assets in shophouses by investors.
Out of the 42 shophouse deals in the first half of 2025, 37 had freehold tenures, amounting to $358.4 million in sales value. This is a decrease from the second half of 2024, where 49 freehold transactions worth $480.8 million were recorded. On the other hand, five leasehold shophouses were transacted for a total of $104.6 million, compared to six in the previous half-year period with a value of $39.4 million. The higher sales value for leasehold shophouses in the first half of 2025 can be attributed to their higher prices, with average unit prices jumping 33.5% to $7,260 per square foot on land compared to $5,440 in the second half of 2024.
Knight Frank also highlights that nine shophouses sold in the first half of 2025 saw a capital appreciation of over 100%. The highest return was recorded by the sale of 63 Arab Street for $7.7 million after being held for 23 years, resulting in a return of 600%.
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However, Knight Frank expects a slowdown in transactional activity due to escalating economic uncertainty, which may prompt investors and buyers to adopt a wait-and-see posture. The firm projects shophouse sales volume to total between $700 million and $800 million for the whole of 2025, lower than the $947.8 million recorded in 2024.
PropNex shares a similar sentiment, stating that prolonged periods of uncertainty and volatility can affect investment appetite, particularly for big-ticket purchases. However, the government’s decision to extend the Seller’s Stamp Duty holding period for private residential properties from three to four years could lead to an uptick in investment interest in shophouses, as they are not subject to this duty.