Understanding shophouses as an asset takes years of industry knowledge to appreciate the various factors that influence their prices, says Jeremy Lim, group district director at Huttons Asia. (Picture: Albert Chua/The Edge Singapore)
The shophouse market in Singapore has been on a bull run since 2019, buoyed by investment demand from high-net-worth individuals and family offices. Navigating the complexities of this niche market requires a level of diligence and knowledge that only specialist real estate salespersons can provide.
It’s no wonder that many seasoned investors and shophouse owners rely on experienced agents such as Jeremy Lim, group district director at Huttons Asia and a 14-year veteran in the industry. He is one of a handful of agents in Singapore who specialises in prime shophouse transactions. His experience and success have led him to clinch Huttons “Number 1 producer” for 2021.
Specialist shophouse knowledge
Real estate investors in Singapore benefit from many sources of publicly available and reliable data on the local property market. But shophouses are a segment where the full extent of the sales activity is rarely publicly showcased.
For example, shophouses for sale are not always publicly advertised as owners value their privacy over publicity, says Lim. “Understanding shophouses as an asset also takes years of industry knowledge to appreciate the various factors that influence their prices,” he adds.
Some important considerations include the size of the floor area and the planning permissions granted, because shophouses that have F&B approval tend to command a price premium in the market, he says.
Even the design and architecture of a shophouse can influence the price it commands, while factors such as the number of entrances impact the maximum number of tenants the landlord could lease to, says Lim. “In general, a shophouse that has more entry points like staircases usually gives each tenant a dedicated entryway,” he adds.
A view of the conservation shophouses in Singapore’s historic Chinatown area. The rarity of these assets make them highly desirable investment properties. (Picture: Samuel Isaac Chua/The Edge Singapore)
Another challenge in navigating the shophouse market is understanding the various conservation guidelines set down by URA, says Lim. The strictest form of building conservation is practised in historic neighbourhoods such as the commercial areas in Boat Quay, Chinatown, and Kampong Glam, as well as the historic residential enclaves along Emerald Hill and Blair Plain. Different conservation guidelines are applied to shophouses in Secondary Settlements that include Jalan Besar, Beach Road, and Joo Chiat.
The rarity and limited supply of conservation shophouses in Singapore make these assets one of the most desirable commercial investment properties for high-net-worth investors and family offices, says Lim.
In addition, not all shophouses in Singapore enjoy a freehold tenure, which is an attribute that tends to command a premium among discerning buyers and investors, he notes.
Understanding the client
Despite the complexities of the shophouse market, these properties continue to be highly sought after. In 2021, the volume of shophouse transactions surged to a record high of $1.9 billion, topping the values of $915.9 million and $912.7 million in 2019 and 2020 respectively.
“Based on my experience working with many high net-worth clients and family offices, this group of buyers view shophouses as trophy assets, either part of their investment portfolio or for their own use as an office space,” says Lim.
As shophouses are commercial properties, purchasing one does not incur any additional buyer’s stamp duty compared to buying more than one residential property in Singapore, he says. “Shophouses also tend to be viewed as stable legacy assets that can be inherited by the next generation.”
Lim has served many local and overseas high-net-worth clients over the years and many of them are returning clients who regularly rely on him for his professionalism and industry knowledge. As a result, he also manages the property portfolio of many of his long-term clients.
Lim does not believe in upselling his clients. Instead, his process always begins by understanding the needs and background of each client. “Understanding which locations they prefer to invest in, whether they intend to utilise it for their own use or as an investment, and how long they intend to hold the property helps me to provide tailored advice,” says Lim.
In 2021, he transacted several major shophouse deals, including the sales of a three-storey conservation shophouse on Craig Road for $30 million, and another three-storey conservation shophouse in Tanjong Pagar for $15 million. This is on top of several rental deals for residential shophouses that he also closed last year.
Leveraging years of experience
His ability to connect the right buyers and sellers is based on his connections with many existing shophouses owners. “Over the years, I have dedicated a lot of time to understanding the shophouse neighbourhoods, meeting and getting acquainted with many different owners, and continuously learning about the market,” says Lim.
His accumulation of industry knowledge over the years and professional dedication to provide the right advice to clients have led to Lim’s success as a property agent. He was the first agent in Huttons Asia to bring in a gross monthly sales commission of more than $1 million in August 2021, and he was the first agent in the agency’s history rake in a sales commission of more than $3 million for the whole of 2021.
“This would not have been possible without the longstanding support of my trusted clients,” says Lim.
On top of his shophouse speciality, Lim also serves the luxury residential market and has recently sold units at New Futura, Gramercy Park, Martin Modern, and Wallich Residences.
He displays the same amount of professionalism and industry knowledge when helping his clients navigate the luxury non-landed market as well. This has helped many of his clients enjoy profits when they invest in properties, and for those looking for their dream home, he has been able to curate the best units in the market for them.
On top of all of that, Lim is also focused on developing his own team of agents under the Jeremy Lim Group. The 180-strong team comprises a mix of newbies and veterans who are themselves experts in various segments of the property market, from residential to commercial properties.