Traditional shophouses, with their rich history and quaint style, are gaining popularity among real-estate hunters
By tay suan chiang
They are a common sight in culturally rich areas in Singapore, such as Chinatown, Little India and Tanjong Pagar.
Usually two or three storeys high and constructed in contiguous blocks with common party walls, these buildings have shop premises on the ground floor and living accommodation above.
Built between 1840 and 1960, shophouses are an important building type in Singapore’s architectural heritage.
Often long and narrow and typically dark inside, they have been gaining popularity with investors.
It was reported earlier this week that shophouses are becoming an attractive investment option in the wake of government measures to cool the housing market. In this sector, there are few signs of government intervention in commercial properties such as shophouses.
Ms Mary Sai, an executive director at property consultancy Knight Frank, has seen a 10 per cent increase in inquiries about buying shophouses compared to last year.
There were reportedly 380 shophouse transactions last year, up 44 per cent from the 263 sales in 2009.
As for prices, a three-storey, 99-year-lease shophouse in Tanjong Pagar sold for about $3.7 million last year. Over in Little India, a two-storey shophouse on a 99-year lease fetched about $1.6 million.
Prices for shophouses have gone up about 10 to 15 per cent since last year.
Ms Sai says for freehold shophouses, buyers can expect to pay a 10 to 15 per cent premium. There can be a mix of leasehold and freehold shophouses in an area. Potential buyers will have to engage a lawyer to do a title search on the particular shophouse.
But shophouse hunting is no different from shopping for other real estate. ‘Location, rental yield and the potential of capital appreciation are key factors,’ she says.
Rental yield is the rate of return from buying a property. It is the annual rent divided by the total capital value of the property.
Shophouses in the central business district, such as Telok Ayer, Chinatown and Tanjong Pagar, are top choices.
Rental yield for shophouses tend to be higher too, compared with private homes in the same area. Investors can expect to have a rental yield of 4 to 6 per cent in places such as Tanjong Pagar, says Ms Sai.
The yield for private homes is usually 3 to 3.5 per cent.
She adds that with a limited supply of shophouses, such properties will appreciate in value.
But buying a shophouse comes with conditions. For one thing, buyers cannot use their Central Provident Fund savings to buy non-residential properties, under which shophouses are classified.
A hefty deposit is also required. ‘You will need to have 30 per cent of the asking price in cash before purchasing one,’ says Ms Sai.
Director Terence Chan of design firm Terre had his office in a Smith Street shophouse done up to look like a home. –PHOTOS: TERRE, FILE
But the other upside is, given the limited number of shophouses, there are plenty of tenants such as those who do not wish to pay for high rentals for commercial office space.
Among them is Mr Terence Chan, director of his own design firm, Terre. He has been renting two units on the second storey of a shophouse in Smith Street since 2006.
‘Shophouses provide a more intimate space compared to commercial spaces,’ says Mr Chan, who pays about $5,400 a month in rent for his 1,800 sq ft space. It also comes with 7m-high ceilings, which he likes.
He has done up his office to look like a home. Art pieces dot the walls and there is a cosy sitting area.
‘I want to create an inviting environment for clients and friends,’ says MrChan, 40.
While property experts classify shophouses strictly as those with commercial business on the ground floor, and residential uses on the upper floors, the Urban Redevelopment Authority (URA) has a wider classification.
According to the URA, shophouses can be zoned for commercial/residential uses and solely for residential use. The latter includes conservation terrace homes such as those along Blair Plain, Cairnhill Road and Emerald Hill.
Such homes, often two or three storeys high, are a variation of the traditional shophouse and have also garnered an interest among home buyers.
Mrs Annie Lee, 62, director of Wolfgang Violin Studio, bought a three- storey shophouse in Neil Road in 2006. She declined to disclose how much she paid for her 5,800 sq ft home.
Last year, a shophouse along the same road sold for $6.5 million.
She was attracted to its convenient location. ‘Plus it had high ceilings, a wonderful layout with airy courtyards and the size is ideal for extended family living,’ says Mrs Lee. She lives with her husband, two daughters Tjin and Sheen, a son-in-law and two maids.
The conservation shophouse, which was built in 1920, was partially renovated but fairly well maintained by its previous owners.
She made some changes to modernise it, such as replacing the original terracotta floor tiles in the living and dining rooms with marble tiles, painting the dark wooden beams white and fitting bathrooms to all six bedrooms.
However, some original features were retained. These include the main door, with its unusual door locking system, and original paintings in the courtyard and calligraphy and carvings.
It is not just Singaporeans falling in love with shophouses.
German-born, Singapore permanent resident Stefanie Hauger, 41, lives in a three-storey unit in Everitt Road with her seven-year-old daughter.
The director of homeware store Vanilla Home bought the place in 2009. She declined to reveal the price.
She has been living in Singapore for 17 years in various housing such as apartments, black-and-white houses and one other shophouse.
Her current 4,200 sq ft house has three bedrooms and a rare rooftop terrace, which she converted into a lounge area.
‘I sunbathe here and the roof lounge makes me feel like I’m somewhere else instead of Singapore,’ she says.
She designed panels to hide the shophouse’s unsightly structural columns and decorated the place with an Asian theme and items from her store.
‘Buying a heritage home is like buying into the history of a country,’ she says. ‘Such homes never lose their value.’
‘I sunbathe here and the roof lounge makes me feel like I’m somewhere else instead of Singapore’