With their rich heritage charm and iconic architectural allure, it’s no wonder little shophouses in Singapore have captured the attention of investors (foreigners and locals) seeking trophy assets.

Now, have you already set your sights on owning one of these unique properties? Making the right choices and treading the right path is vital before taking the leap.

Purchasing a shophouse is no ordinary transaction; it comes with unique legal considerations that must be carefully understood and navigated. We have previously delved into the fascinating history and evolution of conservation shophouses in Singapore. We have also discussed the different types of shophouses investors can view as valuable property assets.

You will find this article helpful if you envision your shophouse as a charming residential space, a hip café, an office retreat, or a vibrant recreation area. We will provide valuable insights and guidance to make your investment in a little shophouse worthwhile. Discover some tips to unlock the potential of this extraordinary property class.

Assess Your Eligibility as a Little Shophouse Buyer

Investing in Singaporean properties offers many opportunities, and knowing your eligibility will help you craft a lucrative investment strategy. If you are a local or permanent resident of Singapore, you generally have access to various real estate options. However, if you’re a foreigner, there are specific regulations you should know about.

Foreigners are typically eligible to purchase shophouses zoned for commercial use. Commercial shophouses are, therefore, easier to invest in for non-residents than landed residential properties, which need approval from the Land Dealings Approval Unit.

Find Out if It’s a Conservation Shophouse

It is crucial to know the conservation status of a shophouse, not only for its aesthetic appeal but also for future enhancements. Around 6,500 shophouses remain conserved in the city-state. Consider whether your chosen property falls under the conservation shophouse category when investing in shophouses. These heritage gems entail a unique set of responsibilities for restoration and renovation.

Conservation and restoration of conserved shophouses in historic districts like Boat Quay, Chinatown, Kampong Glam, and Little India are essential to safeguard their significance. Shophouses within residential historic districts like Blair Plain, Cairnhill, and Emerald Hill, on the other hand, enjoy more flexibility. Owners can make modest modifications here, such as adding an additional rear extension, as long as it remains below the main roof.

Understand Shophouse Zoning

Understanding Singapore’s zoning classification ensures you can use the property as intended without violating regulations. Some shophouses are zoned for residential purposes, with the first floor designated for shop units and the upper floors reserved for residential living. However, the upper residential floors are exclusively for residential use and cannot be used for non-residential functions.

On the other hand, there are shophouses zoned for commercial purposes. The shophouse owner can seek permission from the authorities to convert the residential portion into a shop or office.

Conduct Thorough Due Diligence on Shophouse Tenure

When conducting shophouse investments, knowing the remaining lease and how it affects financing options is crucial for making a wise investment decision. Shophouses in the city may carry different leasehold titles, ranging from 99 to 999 years, or even be freehold properties.

Urban Redevelopment Authority (URA) records reveal that private shophouses were constructed between the 1840s and 1960s, and their pricing may appeal to buyers. However, caution is warranted, especially when the remaining lease is less than 50 years. Limited lease durations can affect financing options, as some banks limit the amount they offer for properties with short leases.

So, if you’re considering investing in a shophouse, it’s essential to research its tenure. Talking to bankers about financing possibilities can also provide valuable insights into your investment’s financial feasibility.

Map Out Your Investment Strategy

You can add value to your shophouse investment through various asset management strategies. One approach involves implementing a leasing strategy that attracts tenants willing to pay higher rents, such as upscale F&B businesses.

Another option is to convert parts of the shophouse into offices, residential spaces, or hospitality businesses. For instance, you can transform the upper floors into furnished offices or co-working spaces to generate higher yields. Shophouses have been converted into co-living spaces or serviced apartments, while others have been combined into boutique hotels.

Additionally, shophouses with A&A (additions and alterations) opportunities offer another investment strategy. You can explore expansion opportunities like adding an extra story or a rear extension.

Hire a Property Agent

While some investors might be tempted to navigate the process independently, enlisting the expertise of a knowledgeable property agent is beneficial for several compelling reasons:

• Local expertise and market insight – A seasoned property agent possesses in-depth local real estate market knowledge. Their valuable insights into current trends, property values, and growth areas can benefit you.

• Extensive property network – Real estate agents have extensive contacts, including property owners, developers, and other professionals. It increases your chances of finding the right shophouse for your budget and preference.

• Negotiation skills – A skilled property agent can represent your interests during negotiations with the seller or their agent, ensuring that the best possible deal is struck.

• Legal and due diligence support – A reliable property agent can assist you with the legal process, conduct due diligence on the property, and identify potential red flags.

• Time and effort savings – Searching for a suitable shophouse, conducting viewings, and handling paperwork can be time-consuming and overwhelming. Delegating these tasks to a property agent allows you to focus on other aspects of your investment strategy.

• Post-purchase assistance – A good property agent’s support doesn’t end with the purchase. In the future, they can also help you find tenants, manage the house, and sell it, ensuring a seamless investment process.

Conclusion

Investors looking for capital appreciation and value enhancement in Singapore often seek out shophouses due to their heritage charm, scarcity, and prime locations. Success in this captivating world can be achieved through informed decisions and strategic thinking.

However, it’s important to note that shophouse ownership has unique legal considerations requiring careful attention. If you want to invest in a shophouse confidently, follow the tips discussed above and seek a reliable property agent.

Explore Shophouse Investing with Shophouse Collective!

Discover Singapore’s finest shophouses for sale with Shophouse Collective. With our extensive database of shophouses in Singapore, we can cater to investors and F&B operators.

With our extensive knowledge of URA guidelines and experience navigating the shophouse market, we guarantee a seamless transaction process. Contact us at +65 9888 2882 or for your shophouse requirements in Singapore. We look forward to working with you.