Why Some Clarke Quay And Beach Road Shophouses Could Become More Attractive After URA’s Latest Move

For more than a decade, the government has generally rejected the application of new hotels, hostels, and serviced apartments in parts of the Central Area such as the Singapore River Planning Area and parts of Rochor.

But now, the government has overturned this long-standing guideline and relaxed its stance to new development applications in two key areas – Upper Circular Road in Clarke Quay and a street block along Beach Road.

Specifically, the area of Clarke Quay where owners may submit proposals for new hotels, hostels, and serviced apartments which consists of the commercial properties along Upper Circular Road, Carpenter Street, Hongkong Street, and a portion of North Canal Road.

Meanwhile, several commercial as well as mixed-use commercial and residential buildings along Tan Quee Lan Street, Liang Seah Street, parts of Middle Road, Purvis Street, and Seah Street are part of the relaxed guidelines.

The revised stance by the government is significant because it carries with it the possibility that the character of these heritage locations could be eroded if the number of new hotels, hostels, and serviced apartments which could spring up is not properly managed.

For 12 years, proposals for new hotels, backpackers’ hostels and serviced apartments were not allowed in these two conservation areas. New development applications that did manage to go through were mostly related to supporting commercial uses such as shops, restaurants, and bars.

Back in 2014, when URA tightened its approvals for this type of change-of-use applications, it noted that backpackers’ hostels and boarding houses shouldn’t dominate and displace the broader commercial activities in those areas. The rationale was to preserve the districts’ unique character by preventing the “over-proliferation” of short-term accommodation.

At the time, URA did not specify that the guideline targeted shophouses, but it was widely understood to include those properties which make up a significant part of the areas the guidelines targeted.

However, things seem to have changed in the minds of urban planners. In the circular that announced the revision, URA cited that the revision corresponds with its “pro-business initiatives to address business needs and encourage more vibrancy”.

At the moment, this is a two-year pilot that will end in May 2028. However, it effectively lifts the 12-year ban on short-stay accommodation in those two heritage locations – Upper Circular Road in Clarke Quay and Beach Road.

The latest revision follows a year-long government trial to revitalise the Boat Quay Waterfront, Circular Road, Lorong Telok and Canton Street areas, which began in August 2025. That pilot initiative includes the extension of liquor licences till 4am and consideration of applications from new bars, pubs and nightclubs.

According to URA, its revised approach towards new hotels, hostels, and serviced apartments is part of its review of prevailing regulations and reduces the compliance burden on businesses.

It will take time for building owners and asset managers to fully incorporate what the latest revision means for them and the value proposition of the buildings they may own in these two locations. But by and large, most will see it as a welcome change that heightens the appeal of the right type of commercial properties there.

Most brokers expect a renewed interest in the commercial buildings and shophouses in the two identified street blocks. Demand for new hotel and serviced apartment properties has been robust for several years, buoyed by the limited number of available properties that may come onto the market.

Some shophouse owners are banking on this renewed interest to launch their properties for sale. For a pair of shophouses near the Upper Circular area that were just put up for sale, this guideline relaxation greatly expands the list of prospective buyers.

Two adjoining commercial conservation shophouses on 18 and 19 Hongkong Street are for sale in Singapore’s Central Business District. (Photo: Knight Frank)

Located at 18 and 19 Hongkong Street, these 99-year leasehold conservation shophouses are right in the middle of the street block at Upper Circular Road where the relaxed guidelines are applicable.

The shophouse at 18 Hongkong Street is a four-storey commercial building with an existing gross floor area of about 5,074 sq ft. It has a guide price of $14.5 million ($2,858 psf).

Meanwhile, 19 Hongkong Street is a four-storey commercial building with a six-storey rear extension, in total it has an existing floor area of 8,842 sq ft. It underwent an extensive $7 million refurbishment in 2015. This included upgrading building specifications, installing a passenger lift serving all floors, creating a private on-site car park lot and topping up a fresh 99-year lease. This property is listed for $27.5 million ($3,111 psf).

Marketed by Knight Frank, the shophouses can be purchased individually or collectively via an Expression of Sale (EOI) exercise. Combined, they fetch a $42 million ($2,675 psf) price tag.

It will be properties like these that will catch the eye of most investors and owners looking to capitalise on the loosened planning permissions in Clarke Quay and Beach Road. It is especially appealing because the shophouse at 18 Hongkong Street currently enjoys an existing backpackers’ hostel approval.

In general, most asset owners and hotel operators will be on the look out for adjacent properties like this, in order to increase the room count and the number of keys. Dayna Ang, senior manager at Knight Frank, says that combined ownership of a pair of assets like this also creates greater flexibility in planning, circulation and operational efficiency for future accommodation uses.

“The existing backpackers’ hostel approval at 18 Hongkong Street, coupled with upgraded building specifications, a passenger lift and a longer lease tenure at 19 Hongkong Street, provides investors with an attractive platform to explore larger-scale accommodation-led repositioning,” she says.

Taking a step back, it makes sense why the government has identified this part of Clarke Quay and Beach Road for this pilot revision to the guidelines. Both locations are within heritage precincts that most tourists already frequent when they visit Singapore. But it is tough finding affordable and good-quality accommodation options in these areas.

The EOI for the sale of 18 and 19 Hongkong Street shophouses closes on Tuesday, August 25.

What will this mean for some of the properties in these affected heritage areas?

It is too early to tell if the revision to the permitted use of some buildings in Clarke Quay and Beach Road/Rochor will significantly ramp up the sale of commercial buildings in the identified street blocks.

If the relaxed guidelines stick around past the initial two-year pilot period, the policy shift may broaden future repositioning opportunities within the precinct, while boosting long-term investment appeal of well-located commercial conservation assets for investors and accommodation operators.

Ever since the hike in additional buyers stamp duty on residential purchases by corporate entities and foreigners, most high net-worth investors and investment firms have turned to well-located commercial properties, including hospitality assets and conservation shophouses.

Ang points out that Singapore continues to reinforce its standing as a haven for capital despite the heightened geopolitical and economic uncertainty in recent years. “Against this backdrop, demand for scarce commercial shophouses is expected to remain well supported by investors seeking stable, tangible assets with long-term capital preservation and value creation potential”.

For now, property owners and hotel/hostel operators need time to re-evaluate the feasibility of launching new hotels and serviced apartments in the two locations. We shall also have to wait and see how many change of use applications URA approves, not forgetting that conservation properties carry nearly prohibitive renovation limits.

But if those hurdles can be overcome, it will be good news for local hotel operators who have been waiting for more than a decade to expand their footprint in some of the most popular heritage spots in Singapore.