The shophouse market has experienced a precipitous decline in the first quarter of 2025, with transaction volumes plummeting 43% quarter-on-quarter, extending a troubling trend that defined the property segment throughout 2024. This downturn follows an already challenging year in which Huttons Data Analytics recorded a mere 74 shophouse transactions, substantially lower than the 133 transactions documented in 2023.
Particularly remarkable is the fact that only 67 landed shophouses changed ownership in 2024, representing the lowest annual figure since the Asian Financial Crisis of 1998. The second half of 2024 exhibited a further deceleration in market activity, with just 28 landed shophouse transactions compared to 39 in the first half of the year.
This decline in transaction volume has been mirrored by a significant contraction in total value, with second-half 2024 transactions amounting to $229.3 million, down from $365.3 million in the first half, bringing the full-year shophouse sales value to $594.5 million. Historical context underscores the severity of current market conditions, as the previous historic low occurred in 1998 with 48 shophouses sold for a total of $11.3 million.
Multiple factors have contributed to this protracted market softness, including a high-profile money laundering case in 2023 that dampened investor sentiment, persistent geopolitical uncertainties, and a notable disconnect between buyer and seller price expectations. High interest rates and rising price quantum have produced unattractive yields for potential investors in this segment. The situation closely mirrors broader commercial real estate trends where elevated construction costs are limiting new developments nationwide.
Institutional investors, who maintain significant holdings in this property segment, have demonstrated high holding power, effectively limiting forced sales and keeping supply restricted despite the challenging environment.
Looking forward, analysts anticipate that firm economic fundamentals and projected U.S. Federal Reserve rate cuts could potentially reinvigorate the shophouse market in 2025. Although prices have recorded marginal declines in 2024, institutional owners have largely resisted significant discounts.
Market observers expect transaction volumes to gradually recover once the price expectation gap between buyers and sellers narrows, with slight corrections potentially creating entry opportunities for investors seeking long-term capital appreciation and improved yields.
