What is Shophouse? Should you invest? Pros and cons to know

What is Shophouse?

Shophouse is a model of housing combining business and trade that is very popular in urban areas around the world, especially in Southeast Asia and China. In addition to being “commercial townhouse”, shophouse is also known as “business apartment”.

Although it appeared in Vietnam ten years ago, in recent years, the shophouse model has emerged as a new investment trend of the real estate business.

In our country, shophouse is divided into two main types, including: Shophouse built in the podium of high-rise apartments and shophouse in adjacent houses.

With a shophouse in the podium of high-rise apartments, this is a type of apartment usually designed with a scale of 1 to 2 floors, a 50-year lifespan.

Shophouses with townhouses are usually built in front of the street, and the commercial and service areas are synchronously planned. The house will be granted a certificate of land use rights, ownership of houses and other structures attached to the land with a long term of use in accordance with the Land Law.

Should you invest in a shophouse?

Before deciding to invest in any type of real estate, investors should also consider the product benefits and drawbacks, and shophouse is no exception.

True to the name of housing combined with commerce, shophouse is a real estate model that meets both the needs of being a place to live and opening a business and trade store. However, each type of shophouse has its own advantages and disadvantages. Depending on the needs and business purposes, investors can choose for themselves the appropriate type of shophouse.

Advantages of shophouse

With the “dual” function of both residential and business, the first advantage of a shophouse is that the owner will significantly reduce the cost of renting accommodation or business locations.

In addition to saving operating costs for the business location and convenient for travel, shophouse owners also enjoy convenience in living thanks to the separate design between the residence and the place of business.

In addition, shophouse has the advantage of area and is often built in densely populated areas. This is the source of potential customers for the owner’s business purposes.

Another advantage of shophouse is the limited quantity. In a real estate project, the shophouse type usually accounts for only 2% to 5% of the total number of products. This creates scarcity, which is the main factor that makes the liquidity of the shophouse type always high.

Disadvantages of shophouse

The first is the selling price. At a project, a shophouse usually has a higher selling price than other ones apartment or other normal housing at least 20%. Even in some projects, the shophouse price is twice as high as other products. Because they have to spend a larger amount of money, investors need to calculate the profitability.

Next is the limitation on ownership period. The term of ownership of shophouses in high-rise apartment buildings lasts only 50 years. According to the law, at the end of this period, the shophouse will belong to the first owner when granting the project permit, ie the investor or the state for the allocated land with a definite term. However, when the land use term expires, if the land user wishes to continue using it, the State will consider extending the land use term but not exceeding 50 years.

Another disadvantage of shophouse is the construction progress. When investing in a shophouse, investors often have a specific business plan to make a profit. If the investor delays handover, it will affect the buyer’s business opportunities.

Unlike shophouses with townhouses, shophouses in the podiums of high-rise apartment buildings are only allowed to be used for commercial purposes. Owners are not allowed to register for temporary or permanent residence here.

Quang Dang (synthetic)