What to know before you invest in a shophouse

Commercial property no longer plays second fiddle to residential property in buyers’ and investors’ eyes, and shophouses are popular choices. If you are thinking of buying one, here’s what you need to know before forking out a tidy sum for it.

By Cheryl Marie Tay

What’s the purpose for your purchase?

Whether you are considering a shophouse as a business office, residence, investment property or retail unit, determine whether the area you are looking at is a good fit for the purpose of your potential purchase. For instance, Chinatown has many shophouses being used as business offices and retail units, while Cairnhill and Emerald Hill are known as residential historic districts.

Find out more about zoning

Are you allowed to use your shophouse of choice for its intended purpose? Shophouses are officially zoned for different uses, depending on their location. Some shophouses are zoned residential, with shop units on the first floor and residential units on the upper floors.

Other shophouses are zoned commercial, but like those zoned residential, can also have shops on
the first floor and residences on the upper floors. Bars, food catering businesses and religious activities are among the uses not permitted on the premises of both residential and commercial shophouses. Depending on your intended use for it, you may need to obtain planning permission from the authorities. You can find out more about which activities require planning permission and which do not at the Urban Redevelopment Authority’s (URA) official website.

The pros and cons of conservation

There are several Historic Conservation Districts in Singapore, under which shophouses fall into three categories: Historic Districts, Residential Historic Districts and Settlements. There are different rules for buying and refurbishing shophouses in these districts.

For instance, shophouses in a Historic District such as Kampong Glam must be fully conserved, whether you convert the use of your shophouse to residential or commercial. In a Residential Historic District, the rules are less stringent, and you may make slight modifications to your shophouse. For full details on Historic Conservation Districts, study the URA’s Conservation Guidelines.