Key Factors for Buying or Operating a Shophouse in Singapore

Singapore’s shophouses serve more than just architectural landmarks, they are prized investment assets and dynamic commercial spaces. Whether you’re considering buying one as an investment or operating a business within one, shophouses offer a unique blend of history, charm, and financial potential.

However, owning or managing a shophouse isn’t as straightforward as purchasing a modern property. In this blog, get to know the key factors you should consider before making your move!

Location: The Key to Value and Success

Consider whether the area aligns with your budget and your target audience

As with any real estate investment, location is everything. The district you choose will directly impact rental demand, foot traffic, and property value appreciation.

Prime districts such as Tanjong Pagar, Chinatown, Telok Ayer, and Boat Quay command higher prices but also attract premium tenants. Heritage areas like Kampong Glam and Little India offer strong tourism and cultural appeal. Emerging districts may provide better value and growth potential, though they might not have the same prestige.

If you’re planning to operate a business, consider whether the area aligns with your budget and your target audience.

Purpose of Ownership: Investment vs. Business Use

Some buyers operate their businesses on one floor and rent the rest

Before purchasing a shophouse, clarify your primary objective:

• For investment: Focus on rental yield, tenant demand, and capital appreciation. Look for properties in high-demand commercial zones with long-term business appeal.

• For business use: Assess whether the layout, location, and surrounding businesses suit your operations.

Some buyers do both, operating a business on one floor while renting out the rest. This strategy can help offset costs while maintaining control over the space.

Condition and Renovation Potential

Ensure the shophouse layout is functional for your needs.

Shophouses, especially those in conservation areas, may require significant restoration to restore their prime conditions.

While their heritage elements add charm, they also bring maintenance and renovation challenges, for example:

• Older shophouses may have structural issues, outdated electrical wiring, or plumbing concerns.

• Renovation flexibility depends on the type of conservation status. Some buildings have strict restoration rules.

• Restoration costs can be substantial, so budgeting wisely is crucial.

If you’re buying a shophouse for business, ensure the layout is functional for your needs. Open spaces work well for retail or dining, while office use may require modern partitions and amenities.

Market Trends and Future Potential

Understanding market cycles is crucial before making a purchase

Shophouse prices in Singapore have been steadily rising due to their scarcity and investor interest. However, understanding market cycles is crucial before making a purchase.

• Is demand in your chosen area growing?

• Are there any upcoming developments that could impact property value?

• Is your business sector thriving in shophouse spaces?

Monitoring these trends helps ensure you buy at the right time and in the right place. Additionally, you can check out or previous blog where we discussed the reasons why shophouses are considered a hot commodity in Singapore.

Buying or operating a shophouse in Singapore is an exciting yet complex endeavor. Factors like location, zoning regulations, property condition, and market demand all play a crucial role in determining success.. Whether you’re an investor seeking high-value assets or an entrepreneur looking for a unique business space, an informed decision is key to long-term success.

Thinking about purchasing a shophouse? Whether you need expert insights or want to discover the hottest picks of the season, our PSE team is here to guide you. Get in touch today and make informed purchase decisions with confidence!