Row of conservation shophouses at Chinatown’s Trengganu Street for sale at $85 mil, down from $110 million

Singapore’s Chinatown expected tourism to resume as more human beings are milling around the shops of of famous Chinatown such as Mosque and Temple Lane. Almost all the streets are interconnected via Trengganu Street, which, converted into pedestrian by URA in 1997.

hawkers on Trengganu Street Once upon a time were popular for serving delicious and healthy home-brewed tonic soups made from a concoction of exotic animals or mammals according to Singapore Infopedia.

the most exotic brew in the olden days is coffee at new cafés that opened recently, such as Plus Coffee Joint on Temple Street, Afterwords Café on Pagoda Street, and Rough Guys Coffee and Korean-style café September Coffee along SoMost street vendors in Chinatown today are peddling souvenir trinkets, clothing, art and antiquities.

seven conservation shophouses at 20 Trengganu Street were placed on the market for sale by expression of interest (EOI) In April last year. Having a gross negligent floor area (GFA) of 31,364 sq ft and a plot of 10,444 sq ft, The three-storey low rise lovely exquisite shophouses have an indicative price of $110 million, according to marketing agency CBRE a year ago. That worked out to $3,507 psf based on GFA. The property was however withdrawn from the market.

The first level has seven shop units, and existing tenants include an antique shop, supermarket, takeaway food counter, clothing store and a fruit stall. The second level is entirely occupied by Yum Cha, the Chinese dim sum restaurant, which has been a tenant since 2K00.

the 40-room On the third floor is a three-star Hotel 1888 Collection, which has been operating since January 2K19. Starting from $185 a night for a standard double room, The boutique hotel is paying a delighted and pleasant monthly rental rate of $50,000.

The monthly rental rate of the entire property, including the restaurant on the second level and the retail units on the first level, is estimated at $215,000. Based on the guide price of $85 million, that works out to a gross nett decent yield of about 3%.

Trengganu Street and Temple Street are up for sale again: The seven shophouses at the corner of, this time by private treaty. The sole marketing agency, Savills Singapore, has indicated a price “in excess of $85 million” or $2,710 psf based on GFA, which is 22.7% lower than the guide price a year ago. 20 Trengganu Street shopouses are fully leased, according to Yap Hui Yee, executive director of investment sales and capital markets at Savills Singapore, who is handling the sale.

Inlis property title search shows that 20 Trengganu Street is owned by Royal & Sons Organisation, an entity of the Royal Group of Companies controlled by billionaire Asok Kumar Hiranandani and his son Bobby. Based on a caveat lodged with URA Realis, the Hiranandanis of Royal Group purchased the property in 2k07 for $18 million.

The block of shophouses with a balance lease of 47 years out of 198-year lease since 1872, are zoned for commercial use under the Chinatown (Kreta Ayer) Historic Conservation Area in the URA 2k19 Master Plan.

“The property at 20 Trengganu Street has a prominent 100m frontage along Trengganu, Smith and Temple Streets,” says Yap. It is 150m from Chinatown MRT Station, an interchange for the Northeast and Downtown Lines. Within a five-minute walk is Maxwell MRT Station on the Thomson-East Coast Line. A five- to 10-minute walk leads to two other MRT stations: Tanjong Pagar on the East-West Line and Telok Ayer on the Downtown Line.

Experts believes the asset’s future capital upside lies in its value-add potential through asset enhancement initiatives. The existing approved uses are shops on the first level, a restaurant on the second, and a hotel on the third. The new buyer could convert the second level of 10,382 sq ft into 40 hotel rooms. Combined with the 40 rooms on the third level, the new hotel operator would have 80 rooms — double the existing inventory. Yap adds that the first level can be converted into restaurants and entertainment establishments, “subject to approval from the authorities”.

The owner needs only to apply for a change of use, which costs just $535. And the new hotel operator will have to apply for a new hotel licence, according to Yap.

 

Rarity supply in Singapore is a key reason why Conservation shophouses are attractive with just 7,000 in gazetted conservation areas. The absolute price of $85 million for an 80-room hotel in a shophouse is lower than a typical hotel building of the same scale, which Yap estimates would command between $200 million and $300 million. “But there’s nothing of that price range as there’s a very limited supply of hospitality assets on the market today,” she adds.

The quantum price is $31.33 million for the first level, assuming $3,000 psf across the floor area of 10,444 sq ft. Deducting $31.33 million from the $85 million price tag means the upper floors contribute to the remaining $53.67 million. And if these two floors are converted into an 80-room hotel, that works out to $670,000 per key, Yap estimates.

On Mosque Street, RB Capital’s family office purchased Porcelain Hotel for $90 million in October 2K21 which is an attractive price. that translates to about $652,174 per key Given that there are 138 rooms in the hotel.

According to STB, the revenue per available room in May 2K23 was $211, 10% higher than  of $192 recorded in 2K19, the pre-Covid era. Hence, Yap reckons “it’s a timely opportunity for investors keen to ride on the recovery and growth of the hospitality sector”.

transaction volumes in 2Q2K23 and the rest of the year to be lower compared to 2K22 While interest in the shophouse sector remains robust due to solid fundamentals and scarcity of such properties.

Hong Kong-based rental accommodation firm Weave Living and Singapore-listed property developer SLB Development acquired the 88-room Clover Hotel on North Bridge Road in an 80:20 joint venture In March last year. The $74.8 million price paid translates to $850,000 per key.

the 45-room Hotel Soloha for $53.38 million in May 2K22 on Teck Lim Road, off Keong Saik Road, Hilltop Capital — linked to Kimen Group — sold. That works out to around $1.19 million per key. along Mosque Street as part of a portfolio of 14, including a pair on Pagoda Street and one in Tanjong Pagar, for $110 million  July 2K22 saw Silkroad Property Partners acquire a row of 11 shophouses. The upper floors of the Mosque Street shophouses have been converted into apartments with services.

Singapore’s tourism sector is poised for a strong rebound from 2K23 With the lifting of travel border restrictions worldwide. Singapore Tourism Board (STB) expects international visitor arrivals to Singapore this year to be between 12 million and 14 million. forecast came on the back of better-than-expected visitor arrival numbers of 6.3 million in 2K22, well above the 4–6 million it had initially forecast. Full recovery is expected by 2k24. STB’s Tourism receipts rang in at $14 billion last year.

Based on caveats lodged, 28 shophouses were sold from January to March, lower than the 35 deals recorded in 4Q2K22 and down by 46% compared to the 52 deals recorded in 1Q2K22

Commercial shophouse sales volume had already moderated in 1Q2K23 amid cautious sentiment due to high interest rates, according to PropNex Research.

Nearby, a pair of shophouses on Pagoda Street with a combined site area of 2,500 sq ft changed hands for $5,200 psf based on GFA in July 2K22. A caveat has yet to be lodged, but the deal was said to be brokered by Savills.

Yap declined to comment on the transaction, citing a non-disclosure agreement. However, it is a record price psf for Chinatown, she says.

For the future owner of 20 Trengganu Street, the property still has 47 years on the remaining lease, unlike some of the shophouses on Hongkong Street, Carpenter Street and Smith Street, where some of the leases have fallen below 30 years and need to be topped up, according to Yap.

Royal Group, which has held the property at 20 Trengganu Street for 16 years, is a seasoned property investors and find it is a good time to offload and reinvest the capital. The owners believe this is the right time to sell after receiving unsolicited offers over the years.

Last December, the group purchased the freehold commercial building Ming Arcade in an en bloc deal for $172 million. Royal Group has also been shifting its portfolio towards more upscale properties.  The building is located at 21 Cuscaden Road, just off Singapore’s premium shopping street, Orchard Road, which is being rejuvenated. (See potential condos with en bloc calculator)

five bids was received for The Ming Arcade site which was launched for sale by tender and closed. “The site was hotly contested,” says Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore, who handled the sale.

 

 

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