Why Invest in an HDB Shophouse? What Buyers Need to Know

HBD Shophouses in Bedok North Street (Image credit: EdgeProp, 2023)

When people think of shophouse investments in Singapore, they often picture conserved units in Little India, Chinatown, Arab Street or Keong Saik. Yet there’s another category that flies under the radar: HDB shophouses with attached residential quarters.

These hybrid properties combine commercial utility with residential components, offering investors a unique entry point into the shophouse market. 

But how do they differ from private shophouses, and why do some investors specifically seek them out?

What Is an HDB Shophouse

An HDB shophouse typically consists of:

• A commercial shop unit on the lower floor

• Residential living quarters above

  
  

While built and originally sold by HDB, these properties are classified as commercial properties with residential components. This makes them fundamentally different from standard residential units or fully private shophouses.

HDB stopped selling shophouses directly to individual buyers in 1998, meaning all transactions today take place on the open resale market, adding to their rarity.

Who Can Buy an HDB Shophouse?

HBD Shophouses in Hougang Avenue 1 (Image credit: EdgeProp, 2023)

One major advantage of HDB shophouses is buyer eligibility.

• Singapore Citizens, Permanent Residents, and foreigners face no restrictions when purchasing

• Buyers must be at least 21 years old, not an undischarged bankrupt, and purchases must be made as sole buyers

• Private Limited Companies are also eligible buyers

• Even existing HDB flat owners are allowed to purchase an HDB shophouse

This makes HDB shophouses far more accessible than private residential shophouses, which carry tighter ownership rules.

Financing: A Strategic Advantage

HBD Shophouses in Toa Payoh (Image credit: EdgeProp, 2022)

From a financing perspective, HDB shophouses sit in a favourable middle ground.

Banks are allowed to offer commercial property loans for these hybrid units. This means:

• Loans are not subject to second-home residential LTV restrictions, even if the buyer already owns a home

• Loan tenures and interest rates follow commercial loan structures

• Some banks may still treat the residential portion differently, so lender selection matters

Compared to private shophouses, which are almost always financed purely as commercial assets, HDB shophouses can sometimes offer greater flexibility, depending on bank policies.

How ABSD Applies (And Why It Matters)

A common question is whether Additional Buyer’s Stamp Duty (ABSD) applies.

According to the Inland Revenue Authority of Singapore, ABSD depends on permitted use:

• The commercial shop portion is not subject to ABSD

• The residential living quarters are subject to ABSD, but only on the apportioned value of that residential portion

This partial treatment can significantly reduce upfront costs compared to buying a fully residential property and is often one of the biggest financial draws for investors.

An HBD Shophouse in Toa Payoh (Image credit: EdgeProp, 2022)

HDB shophouses may not carry the same iconic charm as conserved heritage shophouses, but they offer something equally compelling: accessibility, flexibility, and strategic value.

For investors seeking exposure to shophouse-style assets without the ultra-prime price tag, HDB shophouses present a practical and often overlooked opportunity.

Not sure whether an HDB shophouse or private shophouse suits your strategy? The PropNex Shophouse Elites team helps investors evaluate both options from financing and taxes to long-term value. Speak with us to explore what fits your goals best.