This is ASI’s first acquisition in Singapore for its global real estate portfolio. The two-storey shophouses boast a 33m street frontage, and have a gross floor area (GFA) of 19,938 sq ft. They are fully leased to institutional tenants and offer strong and stable income streams, says ASI.

Ted Roy, deputy fund manager of the global real estate portfolio, says: “This is an excellent opportunity for us to further diversify our global fund’s Asia Pacific investment footprint. We particularly like the finite supply of shophouses and the potential for the asset to benefit from Singapore’s 2019 Master Plan designed to rejuvenate the immediate vicinity.”

Roy adds,”The global fund targets direct assets between USD$25 million to USD$75 million ($34.64 million to $103.93 million) which in central Singapore really restricts you to either shophouses or strata offices. Shophouses offered overall control for the fund; the prospect of an upswing in rents for that sub sector and most importantly a well-located, well-let core asset.”

ASI holds a diversified portfolio of real estate assets across Asia Pacific, with direct assets in Australia, Korea, Japan and China. The fund also plans to grow its footprint across both real estate and private markets.

“The Global Real Estate strategy adopts a research led approach and invests into jurisdictions and markets that we believe exhibit robust occupational fundamentals. Accordingly our APAC holdings comprise a portfolio of three Australian industrial assets, which are all located in consolidated/constrained Melbourne/Sydney sub-markets, as well as an office building in the St Kilda region of Melbourne and a grade B Tokyo office,” says Roy.

“Shophouses present a uniquely Singapore purchase proposition with a diverse investor base increasingly drawn to this asset class. With each year, Singapore shophouses emerge as an increasingly more established investment asset class,” says Ting Lim, JLL’s head of Singapore capital markets.

She adds, “Driven by a limited saleable supply and a strong heritage value, a growing number of Asian and foreign investors, including developers, family offices and institutional investors, will continue to invest in this segment in 2020 and beyond.”

Separately, JLL also concluded the sale of the iconic Eu Yan Sang Building at 265 to 271 South bridge Road to 8M Real Estate, in a deal worth $54 million. The row of three-storey conservation buildings has a GFA of 19,885 sq ft, and has been on the market since July last year.

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Located at 48 to 56 Peck Seah Street, the three pairs of two-storey conservation shophouses with attic sit on three separate land lots with a combined land area of 8,213 square feet (sq ft).

They have a total indicative value of S$57.82 million, which works out to about S$2,900 per square foot (psf) based on the total existing gross floor area of 19,938 sq ft.

Situated in the central business district (CBD), the property is set to benefit from the Singapore government’s plans to rejuvenate the city centre under the Draft Master Plan 2019, said Colliers. Initiatives such as the CBD Incentive Scheme to convert ageing office buildings to hotels and homes will inject vibrancy and attract a diverse community to the area, the real estate services firm added.

“Conservation shophouses in prime city locations – typically regarded as trophy assets – are highly sought-after,” said Steven Tan, director of capital markets at Colliers.

The six shophouses are fully let to insurance cooperative NTUC Income, kitchen and bathware brand Kohler, and Middle Eastern restaurant Fat Prince, with the latter two leasing the majority of the space. The property is being offered for sale with the existing tenancies.

“This is a rare opportunity to acquire a row of conservation shophouses with strong tenant covenant and an attractive initial yield of above 3 per cent,” said Clemence Lee, senior director of capital markets at JLL.

Colliers’ Mr Tan added: “Amid the upward trend in rents in Tanjong Pagar, the shophouses will likely have strong reversionary rental recovery across the majority of leases, particularly in a robust leasing market with limited supply.”

Both marketing agents expect strong interest, especially from investors such as boutique real estate funds, family offices and high net worth individuals.

The buyer can explore other uses for the space, such as for co-working or even an exclusive members’ club, Mr Tan suggested.

The site is zoned for commercial use under the Draft Master Plan 2019, thus the additional buyer’s stamp duty and seller’s stamp duty are not applicable. It has a leasehold tenure of 99 years, starting from May 1994.

The shophouses are located opposite Tanjong Pagar MRT station, and have a 33-metre street frontage along Peck Seah Street.

The expression of interest exercise will close at 3pm on Oct 23.

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Marketing agent JLL yesterday said the guide price for the units – 48 to 56 Peck Seah Street – works out to about $2,900 per sq ft, based on the existing gross floor area of 19,938 sq ft.

The units, which are owned by a fund managed by Phoenix Property Investors, have a 33m-wide road frontage and are near the Tanjong Pagar MRT station.

The private equity property fund acquired the shophouses in January 2015 for $42.8 million from shipping firm K Line (Singapore).

JLL said the properties were refurbished at a cost of $2 million in September 2015.

“Due to its rarity, contiguous row of shophouses are highly sought after by investors and are typically traded at a premium as compared to a single shophouse,” said Mr Clemence Lee, senior manager for capital markets at JLL.

“We anticipate strong interest from astute end-users and investors such as boutique real estate funds, family offices and high net worth individuals.”

The shophouses sit on three separate land lots and have a combined land area of 8,213 sq ft. The site is zoned commercial under the Chinatown (Tanjong Pagar) Historic District Conservation Area in the 2014 Master Plan.

JLL said the units will come with existing tenancies. About 80 per cent of the space has been leased to kitchen and bathware manufacturer Kohler and Middle Eastern restaurant Fat Prince.

“On a fully-let basis, the property has a yield of 3 per cent,” Mr Lee told The Straits Times.

He said the prospective owner of the units can expect to enjoy “capital and rental upside” from the urban regeneration of the area over the medium to long term.

New projects in the area include Tanjong Pagar Centre, the upcoming Frasers Tower and the redevelopment of CPF Building.

JLL noted two prominent transactions in the area – 77 to 80 Amoy Street, which sold for $59.5 million ($2,500 psf), and 97 Amoy Street for $12.8 million ($2,600 psf) – both in January.

Transactions last year included 25 Boon Tat Street, which went for $19 million ($3,500 psf); 11 and 13 Bukit Pasoh Road, for $25 million ($2,940 psf); as well as 205 and 207 New Bridge Road, for $20.5 million ($3,525 psf).

JLL said the six shophouses in Peck Seah Street can be sold either individually or collectively. The expression of interest exercise closes on May 23 at 3pm.

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The site has an area of about 15,000 square metres and a maximum gross floor area of over 157,000 square metres.

The white site allows developers to have the flexibility to develop the site for commercial, hotel or residential development, or a mix of these uses.

The highest bid came from joint bidders Perfect Eagle, Guston and Belmeth. They submitted a bid of S$1.708 billion, followed by a joint bid led by RQ Hotel Management at around S$1.528 billion.

Other bidders included Emerald Star and CL Pinnacle Development. Beach Development placed the lowest bid of S$615 million, while a bid from Wee Jong Dit has been disqualified.

The white site was launched for public tender on July 30 and has a lease period of 99 years.

Li Hiaw Ho, executive director, CBRE Research, said the top bid submitted for the site reflected a land price of S$1,006 per square foot per plot ratio.

He added: “In order to obtain this top bid of S$1,006 psf/plot ratio, the gross development value (GDV) for the 60% office component is estimated at S$2,200 psf to S$2,300 psf.

“The mandatory 10% of the overall gross floor area for hotel use would translate into 330-350 rooms, with each room estimated at between S$800,000 and S$900,000.”

He said it would make sense to utilise the remaining 30% for residential units given the growing popularity of inner-city living in the last few years.

“Based on the top bid, condominium units at this mega development could possibly transact at S$2,400 psf to S$2,500 psf when the housing element of this project is ready for launch,” Mr Li said.

He added that the “development of this mammoth project in the heart of the Tanjong Pagar area would inevitably achieve landmark status, and would further propel the Tanjong Pagar area into a growth region for commercial activity anchored by branded international tenants/MNCs.”

URA said it announce the final tender results at a later date after the bids have been evaluated.

Source : Channel NewsAsia – 16 Nov 2010

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The land parcel, which spans just over 2,300 square metres, is one of the two new hotel sites being released under the government land sales programme for the first half of 2008.

The 99-year leasehold site can generate a maximum permissible gross floor area of about 19,415 square metres.

Located within the Tanjong Pagar area, the site is near several hotels serving the business community and foreign visitors.

Under the government’s reserve list system, a reserve site will only be put up for tender if a developer puts in a minimum bid acceptable to the government. – CNA/ac

Source : Channel NewsAsia – 21  Feb 2008

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