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How to Spot a Good Shophouse for Property Investment in Singapore?

Shophouse is a fast-growing subsection of the property market. Freehold shophouse sales in 2021 grew 51.6% over 2020, while total sales value posted 90% growth in the same period. On the other hand, leasehold shophouse sales grew almost three-fold in 2021–a much faster rise, albeit on a much smaller base.

So how do you get your hands on a shophouse for property investment in Singapore? This article will explore some key things to consider so you can make an informed decision when investing in a shophouse in Singapore.

Content

Location

Your property’s location is crucial in Singapore. In such a small country, the location of your property will have a tremendous effect on its value. 

Properties located in industrial areas might not court investors. But if they are located somewhere popular like Orchard Road or Clarke Quay, several investors would want to get their hands on it.

Shophouse historical price and track record

In buying a shophouse, location isn’t the only thing that matters. It may be the critical factor in the success of your investment, but you need to know the following as well: 

  • data availability on past prices and rental rates for similar properties 
  • information about current market conditions
  • age and state of the building

These insights will help you to understand if the price quoted for your potential shophouse matches its value. Besides, how many rental and growth prospects the property has as well depending on its past track record.

To gain access to this vital information, you can work with a reputable real estate agent who specialises in commercial property in Singapore. At Commercial Realty Singapore, I can connect you with hundreds of properties for rent and find one that suits your needs.

Size of the shophouse

It’s essential to know how big your shophouse is because it will determine the number of tenants you can have. 

You should target something that exceeds 200 sqm (i.e., it has more than two storeys), so you can have more than one tenant and hence higher rental income. 

Potential for rental income

Income from rent should be higher than the cost of the shophouse AND renovations. You have to ensure that the income you will receive exceeds what it would cost you to buy a similar property. This limits the risk involved when purchasing a shophouse rental.

Existing tenancy

If you want to invest in a shophouse rental, the first thing to check is if there’s a good tenant in the property. The best kind of tenant pays their rent on time and has not given the landlord any problems at all.

A bad shophouse will have problems like non-payment of rent, illegal subletting, and contract violations. These can be problematic if you try to evict them later as the landlord.

Future developments near the shophouse

Future development is also essential to consider when you are looking for a shophouse to buy. The development of an area could change, and you have to be aware of it. You should also study the plans for the shophouse and compare them with the neighbourhood, community, and country’s goals to see whether this deal makes sense.

Where to start?

As you can see, there are many points to consider when looking for a good shophouse in Singapore. If you follow these tips, you will have a better chance of finding the right shophouse for you and profiting from it. 

All in all, property investment in Singapore is lucrative. To succeed in this market, you need to make the right investments. Contact me today to see what kinds of property await you.