After Good Class Bungalows (GCBs), what’s next for property investors?
According to a new report, demand for historical placemaking properties, including shophouses, will continue to rise for 2022.
Good class bungalows (GCBs) have emerged as prized assets for property investors in Singapore, but there are other key trends to keep an eye out for.
According to a new report by List Sotheby’s International Realty, Singapore has seen escalating activity from private investors and investment funds buying up a collection of conservation shophouses and boutique hotels in historical buildings over the past year.
This trend will continue to rise for 2022, especially for ultra-high-net-worth individuals (UHNWIs) who are also actively snapping up GCBs, said Simon Monteiro, associate vice president of List Sotheby’s International Realty.
“Conservation shophouses, boutique hotels and GCBs all have three attractive qualities as trophy assets – they are limited in supply, have great historical value and come with their own unique story,” said Monteiro.
“This appeals to ultra-rich investors because when they buy these historical placemaking properties, they will own a piece of Singapore’s history, an asset class that is coveted by many and hence have the prestige of ownership akin to valuable fine art. I also have investors who buy them as legacy wealth assets, with plans to pass them down to the younger generations," Monteiro added.
Monteiro likens owning a historical placemaking property to being part of an exclusive members club where there is only a limited number of memberships and a long waiting list. Due to regulatory guidelines to preserve Singapore heritage, there are just not enough of these properties.
According to a report by Colliers, there are about 6,760 conserved shophouses in Singapore. Of these, more than 60 per cent of the shophouses are located in the prime areas of Rochor, Outram, Singapore River and Downtown Core.
Shophouse sales rebounded strongly by 132 per cent quarter-on-quarter to S$310 million in Q2 2021 after a decline of 53.6 per cent quarter-on-quarter in Q1 2021, owing to pent-up demand in Q4 2020. This brings shophouse sales volume in the first half of 2021 to S$444 million, stated the Colliers report.
With over 25 years in the real estate industry, List Sotheby’s Monteiro has seen the prices for shophouses appreciate by 680 per cent. A shophouse sold at Duxton Hill in 2005 transacted at S$385 psf, and in 2021, the same shophouse is valued at S$3,000 psf.
In the past five years, prices have soared exponentially. Two shophouses in Club Street transacted by Monteiro achieved a record price of S$3,935 psf.
“In comparison with current prices for apartments in Singapore’s Orchard Road, where prices could go for about S$6,500 psf, these placemaking trophy assets present themselves as a potentially more attractive investment,” the report said.
"Conservation shophouses, boutique hotels and GCBs all have three attractive qualities as trophy assets – they are limited in supply, have great historical value and come with their own unique story." – Simon Monteiro