What makes a shophouse tenancy worth holding onto?

In Singapore’s shophouse market, transactions may grab the headlines, but it’s tenancy that quietly determines long-term value. A beautifully restored facade or a coveted address can only go so far if the unit doesn’t generate sustainable income.

Investors who understand how to evaluate tenants beyond simply signing a lease, are the ones who consistently realise stronger yields and appreciation over time. So what really makes a shophouse tenancy worth holding onto?

Illustration of restored façade

The value of the right tenant

Not all tenants contribute equally to the long-term performance of a shophouse. The best ones don’t just pay rent on time; they align with the street’s identity, attract footfall, and create stability.

F&B operators, for example, are among the most visible shophouse tenants. Done right, they energise a block and bring consistent traffic. But they also come with higher overheads and operational risks. An F&B tenant who has proven brand recognition, a clear target audience, and the ability to sustain business cycles is worth their weight in gold.

A row of F&B shophouses in East Coast Road (Image credit: The Straits Times, 2020)

Lifestyle brands, boutique gyms, wellness clinics, and concept stores, are another strong tenant profile. These businesses thrive in shophouses because the heritage setting adds character and sets them apart from generic mall units. They tend to have loyal, repeat customers and a longer lifespan once established.

Clinics and professional services are perhaps the most stable tenants of all. They may not generate the same buzz as a café, but their predictability in rent payments and low turnover often make them the backbone of a landlord’s portfolio. 

In short, a good tenant is one whose operations fit both the building and the neighbourhood, creating demand not just for themselves but for the property around them.

Lease terms that build long-term value

It’s not just about who the tenant is — how the lease is structured matters too.

Longer leases (around 3–5 years with renewals) give steady income and show tenant confidence in the location. But rents locked too low for too long can hurt in a rising market. That’s why many leases include step-up clauses where rent increases gradually.

Fit-out investments also matter. When tenants spend on renovations, they’re less likely to leave early, lowering vacancy risk.

Other features like break clauses or short rent-free periods may look like concessions, but they often help secure reliable tenants. And in heritage districts, thoughtful lease terms can encourage stronger, more committed tenants who value the property long term.

Illutsration of a restored shophouse interior in Singapore

The trade-off: Under-market rent vs vacancy

Every landlord eventually faces the classic dilemma: should you keep a tenant paying under-market rent, or gamble on finding a new tenant at higher rates?

The instinct to chase market highs is understandable, especially in prime areas like Ann Siang or Telok Ayer, where demand has surged. But vacancies erode returns quickly, especially if months of downtime are followed by significant reconfiguration costs for a new tenant.

Row of shophouses in Amoy Street (Image credit: The Straits Times, 2024)

Landlords should remain vigilant. A tenant who refuses to adjust to market realities, or whose business model no longer draws footfall, can eventually drag down the property’s performance. 

The balance lies in knowing when to value stability, and when to reset expectations. This is where market data, rental benchmarks, and professional advice come in.

Why this matters to investors

For shophouse investors, tenancy directly drives valuation. A stable, long-term tenant with good terms is far more attractive than a vacant unit or one with frequent turnover, and banks scrutinise tenancy profiles when approving financing.

Strong tenants also lift the street’s reputation, attracting other businesses and benefiting all landlords. This is why many investors curate their tenant mix instead of renting to the highest bidder.

A worthwhile tenancy is one that delivers beyond rent—shaping the property’s identity, safeguarding value through smart lease terms, and balancing short-term gains with long-term stability.

The takeaway: look past who can pay today. Focus on tenants who will strengthen your property’s value years ahead. For tailored tenant strategies street by street, the PropNex Shophouse Elites team can guide you with confidence.