Assessing the potential rental yield is a crucial aspect to consider when contemplating a condo investment. This refers to the annual rental income as a percentage of the property’s purchase price. In Singapore, the rental yields for condos can vary significantly based on several factors, including location, property condition, and market demand. For instance, areas near business districts or educational institutions usually offer better rental yields due to high rental demand. Therefore, conducting thorough market research and seeking advice from real estate agents can provide valuable insights into the rental potential of a specific condo. Keeping an eye out for New Condo Launches can also be beneficial in the decision-making process.
Huttons Asia has released its quarterly research report on the shophouse market, and the results show a relatively muted market in 2024. According to the report, there were a total of 84 caveated transactions in 2024, which is below the yearly average of 200 shophouse deals between 1995 and 2023.
Lee Sze Teck, Huttons Asia’s senior director of data analytics, notes that while many buyers did not lodge a caveat, the number of shophouse deals in 2024 is likely the lowest since 1998. The 84 caveated transactions in 2024 had a total value of $683.6 million, which is a 38.9% decrease from the $1.1 billion deal value in the previous year.
Lee also mentions that there were several substantial shophouse deals in 2024 that were not caveated, including properties on Amoy Street, Neil Road, North Bridge Road, and Telok Ayer Street, estimated to be sold for more than $200 million. The biggest shophouse deal in 2024 was Paragon REIT’s sale of The Rail Mall, a strip mall with 43 shop units, for $78.5 million.
This is likely the largest shophouse deal on record, surpassing the previous high of $74.8 million for a row of shophouses on Jalan Sultan in March 2022. The Rail Mall shophouses were valued at $62 million in December 2023, indicating a gain of approximately $16.5 million for the seller.
Most of the shophouse deals in 2024 were done at smaller quantums, with over half of the caveated transactions valued at $5 million to $15 million. District 8 had the highest number of shophouse transactions, accounting for nearly half of all deals in 2024. Lee attributes this to its attractive city-fringe location and lower prices compared to Districts 1 and 2.
Additionally, shophouse rents islandwide saw a 2.6% decrease in the fourth quarter of 2024, with an average of $6.47 psf per month. However, for the whole year, shophouse rents increased by 1.7%. The report also mentions that conservation shophouses on Telok Ayer Street are currently up for sale for $42 million.