A row of shops in Katong, Singapore.
Olivier Shoshana | Gamma Ravo | Getty Images
SINGAPORE – The colorful, ornate “shops” that line the streets in some of Singapore's older neighborhoods are not what people immediately think of when they think of the city-state.
In a country where land is scarce and public housing can cost more than a million dollars, these two- or three-story stores could cost tens of millions. But investors are still snapping it up.
The stores are colonial-era buildings – some were built as early as the 1840s – and are subject to a government conservation programme.
From Jack Ma's wife to Hong Kong star Jackie Chan, as well as Spanish businessman Ricardo Portabella Peralta, the rich and famous are said to be among the buyers of stores in Singapore.
Famed Bridgewater founder Ray Dalio was also recently identified as the buyer of two stores along Club Street in Singapore. CNBC was unable to independently verify this.
A report issued by Knight Frank, a real estate consultancy, showed that store sales in the first quarter of the year increased by 52.2% from the previous quarter to 169.1 million Singapore dollars ($125 million). She pointed to the interest of high-net-worth individuals as a major driver of growth.
This is one of the limited edition Singapore gems, you only have 6,000 individual units. Everything that is saved can never be recreated.
Sebastian Suh
Meir Collective
The most expensive shops along Telok Ayer, Boat Quay and Stanley Street can cost more than S$5,000 ($3,700) per square foot, said Mary Sai, executive director of capital markets at Knight Frank. That's double what's on Upper Fifth Avenue in Manhattan, the world's most expensive retail rental destination.
One of the largest store deals last year was worth S$80 million for six adjacent stores bought by a Chinese investor.
Attractive shops
There have always been pockets of interest in these stores as an alternative asset class or collector's item, but especially so in recent years, real estate experts told CNBC.
“This is one of Singapore's limited gems. You only have 6,000 individual units. Whatever is preserved can never be recreated,” said Sebastian Soh, chief place designer at real estate and investment firm Mir Collective.
No technology can completely replicate the complex molds and design elements, he said, adding that some investors hold onto them as collectors' items.
Only high-net-worth individuals can afford stores nowadays.
Loyal Chen
Director, Propniks
Built between the 1840s and 1960s during the colonial era, only around 6,500 of these shops are designated as protected buildings. They can be used or leased for a range of uses – from food and beverage, retail stores and family offices, among other flexible purposes, Knight Frank Say said.
The appeal of shops increased further when the government launched a series of property cooling measures in April last year.
The fees included surcharges on local residents buying second homes, and fees on foreigners looking to buy any residential property.
Stores, which are largely classified as commercial, are exempt from these high fees.
Colorful old shops on Cross Street, Chinatown.
Pictures from history | Global Photo Collection | Getty Images
Currently, the largest percentage of these stores are taken over by wealthy local individuals or corporate entities in exchange for foreign investors, real estate experts told CNBC.
“Only high-net-worth individuals can afford stores nowadays,” said Luyali Chen, a director at department store company Propnex. High-net-worth individuals are those with a net worth of at least $30 million.
“People are looking for a safe haven to preserve their wealth,” Chen said, adding that these individuals are looking for safe real assets to put their money in alongside other, more popular forms of asset classes.
“One very attractive area in real assets, in the Asia-Pacific region, is custody assets,” he added.
