There is one property segment that is outstanding in its rarity, yet it is not always on the radar of the foreign investors – original shophouses. In Phuket Town you can find these so-called Peranakan houses in abundance, and they start picking up the interest of investors. If Singapore’s example is any indication of the rise of this type of property, then we better pay attention.
There, vintage shophouses have been one of my favourites for many years. Their value, especially in central areas, have jumped over the past 4 years, escalated by their scarcity and demand from funds and foreigners. Some recent deals by foreign investors went for over 30,000 USD per sqm in terms of gross floor area. In the business districts, prices rose some 80% in the last 4 years.
While rental yields on those units are low, investors see a great value in these scarce property gems, as they are aggressively buying them, counting on capital appreciation. Once a shophouse is nicely renovated, there is a good leasing demand, as tenants still find these rents worthy, especially when compared with shopping malls or higher end office buildings. This is a good investment to have in one’s portfolio.