Buying a Shophouse in Singapore: A Complete Guide

Shophouses in Singapore are iconic, heritage-rich buildings that combine commercial and residential uses. Their distinct architecture, historical charm, and prime locations make them highly desirable properties.

Jul 9, 2025 - 07:25

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Buying a Shophouse in Singapore: A Complete Guide

What is a Shophouse?

A shophouse is a narrow, terraced building commonly found in Southeast Asia. In Singapore, these buildings were built between the 1840s and 1960s. They typically have two or three floors, with a commercial unit on the ground level and residential or storage space above.

Shophouses are usually located in conserved districts such as Chinatown, Kampong Glam, Little India, Joo Chiat, and Tanjong Pagar.

Why Buy a Shophouse in Singapore?

1. Prime Locations

Shophouses are situated in the heart of cultural and commercial districts, making them ideal for retail businesses, restaurants, or boutique offices.

2. Limited Supply

There are only about 6,500 conserved shophouses in Singapore, which adds to their exclusivity and value over time.

3. Heritage Appeal

Their vintage facades and rich history appeal to locals and tourists alike, giving businesses operating from them a unique branding advantage.

4. Rental Potential

Due to high demand and low supply, rental yields for shophouses can be attractive, especially in central areas.

Types of Shophouses

1. Freehold vs Leasehold

Freehold shophouses offer perpetual ownership and usually have higher value.
Leasehold properties typically have 99 or 999-year leases, with lower upfront prices.

2. Conserved vs Non-Conserved

Conserved shophouses are protected by URA (Urban Redevelopment Authority). They have specific guidelines for renovations and cannot be demolished.
Non-conserved shophouses offer more flexibility for redevelopment but lack the heritage value.

Who Can Buy a Shophouse in Singapore?

1. Singapore Citizens and PRs

Citizens and Permanent Residents (PRs) can freely buy shophouses, depending on their intended use.

2. Foreigners

Foreigners can buy shophouses only if they are zoned for commercial use. Approval from the Land Dealings Approval Unit (LDAU) is required for those with residential components.

Financing a Shophouse Purchase

1. Bank Loans

Banks offer up to 70–80% financing for commercial properties.
Interest rates for commercial loans are typically higher than for residential loans.

2. Loan Tenure

Loan tenure for commercial properties is shorter, usually capped at 25 years.

3. Down Payment

Buyers should prepare at least 20–30% down payment in cash or CPF (if applicable).

Taxes and Fees Involved

1. Buyer’s Stamp Duty (BSD)

BSD is calculated as follows:

1% on first S$180,000
2% on next S$180,000
3% on next S$640,000
4% on remaining amount above S$1 million

2. Additional Buyer’s Stamp Duty (ABSD)

ABSD does not apply to purely commercial shophouses.
If the property has a residential component, ABSD may apply.

3. Property Tax

Commercial property tax is calculated based on Annual Value (AV).
Different rates apply depending on whether it's owner-occupied or rented out.

Things to Consider Before Buying

1. Zoning and Use

Check the URA zoning: some shophouses may be zoned residential, mixed-use, or commercial. This affects financing, taxes, and usage.

2. Conservation Guidelines

If the shophouse is conserved, renovations and usage must comply with URA's conservation rules.

3. Building Condition

Older properties may need extensive renovations. Conduct a building inspection to estimate costs and check structural safety.

4. Accessibility and Visibility

Consider the shophouse’s foot traffic, nearby amenities, and transport connectivity. These factors affect rental income and resale value.

Renovation and Approval Process

If you plan to refurbish or change the shophouse's layout or facade:

Seek URA approval if it’s a conserved property.
Obtain BCA (Building and Construction Authority) clearance for structural works.
Fire safety clearance is required for commercial use.

Shophouse as an Investment

1. Capital Appreciation

The limited supply and growing demand can drive up prices over time, especially in central districts.

2. Business Use

Many investors use the space for their own businesses while leveraging rental income from upper floors.

3. Resale Market

Well-maintained shophouses in prime locations have strong resale demand from local and overseas buyers.

Popular Areas for Shophouse Investments

1. Chinatown

Rich cultural heritage, high tourist footfall, ideal for F&B and retail businesses.

2. Joo Chiat / Katong

Peranakan charm with vibrant eateries and boutique outlets.

3. Tanjong Pagar

CBD fringe area, perfect for offices and upscale cafes.

4. Little India / Kampong Glam

Colorful, ethnic districts with strong rental demand and cultural appeal.

Conclusion

Buying a shophouse in Singapore is not just a property investment—it’s a commitment to preserving a slice of the nation’s heritage. Whether for personal use, rental income, or capital appreciation, owning a shophouse can be a valuable long-term asset. However, due diligence is essential. Consider zoning laws, tax implications, and financing options before you take the leap.

If you're serious about investing, consult with property agents who specialize in shophouses, and engage legal and financial advisors to make an informed decision.