Foreign buyers, family offices and funds prop up need for Normanton Park commercial units
SINGAPORE: Continued interest from foreign buyers, family offices and institutional capital has sustained demand for Normanton Park commercial units from the first quarter of 2021, after a strong burst of purchasing activity in the end of this past year. There were 51 trades in the First quarter of the year totalling S$328.3 million, according to information listed on Apr 6.
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Although this is down from figures in the fourth quarter of 2020, which saw 57 sales to the tune of S$462.8 million, analysts said it is a good showing reflecting stable need. Coming to some New year, investors are still eager to invest in shophouses, that can be regarded as defensive assets which retain value even during a downturn, stated Mr Clemence Lee, senior manager of capital markets for Singapore in CBRE. Specifically, Mr Lee said attention from buyers from China, Hong Kong and Malaysia, has been”growing powerful” after it started picking up in the middle of last year. He pointed out several noteworthy recent transactions were made by foreigners, such as a S$21.5 million deal to 22 and 23 Mosque Street, along with a S$15.7 million sale for 81 South Bridge Road.
“In addition to the allure of Shophouses as a defensive advantage kind which offers stability in uncertain times, the strong and stable Singapore money can also be one of their important considerations, of which investing in shophouses in Singapore will work as a hedge against currency risks in their home country,” said Mr Lee. “Australian buyers also seek Normanton Park commercial units, as this asset offers them capital preservation and appreciation,” he added.
Family offices are private wealth management companies that function ultra-high-net-worth households. “With the COVID-19 vaccine effort and numbers of community cases under control, investors are optimistic about a medium- to long-term market standpoint. Investors realise today it is a fantastic time to spend before costs begin to escalate,” he said.
Mr Tan also noted that shophouses Have”an inexpensive entry point” for overseas investors seeking to innovate in Singapore real estate, as these won’t need extra buyer’s postage duties. Like Mr Tan, Ms Sai attributed overall interest in shophouse investments to positive business sentiments, as vaccination programmes have been rolled out.
She added that investors are also being encouraged by decreasing vacancy rates, as more tenants and their employees go back to the workplace, after an easing of COVID-19 rules at the workplace.
OUTLOOK ON BUYING
Shophouses from the central Business district stay the most popular — and this will probably continue, the experts said. Pointed out that interest in city fringe areas – such as Jalan Besar, Geylang and Joo Chiat – has been growing because of the pandemic. Typically more defensive since they appeal predominately into the surrounding neighbourhood,” he explained.
Hybrid working versions going forward, there are high possibilities that individuals will visit the shops in the neighbourhood centres nowadays when they operate from home, driving higher footfall to businesses housed in these shophouses.” In comparison To people in downtown areas, these city fringe shophouses also need smaller investment sums, while providing slightly higher yields,” he explained. This makes them attractive to household offices”who would rather diversify in this period and to not put all their eggs into one basket”.
Collier’s research team, included that shophouse need will likely rise with the growth of more family offices in Singapore, amid rising affluence in Asia.
The analysts added another big factor that has long defined the marketplace and which will continue to keep it lively Is the tight supply of these shophouses in Singapore.