Shophouse market slows amid probe into money laundering

Sales of commercial shophouses fell to their lowest quarter in 13 years in the final three months of 2023, as the market turned cautious after a billion-dollar case of money laundering in Singapore came to light in August.

- Joyce Lim

Caveats were filed for just 15 transactions that quarter, compared with 37 deals between July and September.

In terms of transaction value, the deals valued at $95 million from October to December 2023 represented a 70 per cent plunge from nearly $321 million recorded in the same period in 2022.

This is the lowest quarterly sales based on transaction data since 2010, noted a report by property agency PropNex released on Jan 19.

The year on the whole saw a notable slowdown in the once-bustling commercial shophouse market, with 131 shophouses worth about $1.14 billion changing hands. This is down from 191 deals worth $1.6 billion in 2022.

This is the lowest sales volume achieved in a year since 2019, when 123 shophouses fetched a total of $916 million.

PropNex head of research and content Wong Siew Ying said there were fewer big-ticket acquisitions in the final quarter of 2023. She attributed the lacklustre performance to a combination of factors, including a soft economic outlook and heightened due diligence following the anti-money laundering blitz.

At least 10 foreigners have been arrested in what is one of Singapore’s largest anti-money laundering operations, where $2.8 billion in cash and assets were seized.

Meanwhile, the market slowdown also means that owners who were initially confident about price hikes earlier in the year are now more open to negotiation, property agents told The Straits Times.