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Property News 19 Apr 2017

Phoenix Property Investors puts Peck Seah shophouses on the market for $57.8m

HONG KONG-BASED private equity real estate firm Phoenix Property Investors has put a row of six adjoining shophouses along Peck Seah Street near Tanjong Pagar MRT Station on the market.

Five Baghdad Street shophouses

The indicative price for 48 to 56 Peck Seah Street (even numbers only) is S$57.8 million, which works out to about S$2,900 per square foot (psf) on the total gross floor area (GFA) of some 19,938 sq ft.

Currently 82 per cent of the GFA is leased; on a fully let basis, the asking price would reflect a gross yield of close to 3 per cent, according to Clemence Lee, senior manager, capital markets at JLL, who is marketing the property through an expressions of interest exercise that will close on May 23.

The asset comprises three pairs of shophouses, with each pair sitting on a separate land lot. The land tenure for each plot is 99 years from May 7, 1994, which means the balance leasehold tenure is about 76 years.

Mr Lee noted that due to their rarity, shophouses in a contiguous row are highly sought after by investors and are typically traded at a premium as compared to a single shophouse. "We anticipate strong interest from astute end-users and investors such as boutique real estate funds, family offices and high-net-worth individuals."

The three plots have a combined land area of about 8,213 sq ft. Potential buyers may make offers for either all the six shophouses or any of the three pairs.

The shophouses have two storeys and an attic.

Zoned for commercial use under the Chinatown (Tanjong Pagar) Historic District Conservation Area, the property is opposite a public car park.

After Phoenix Property Investors acquired the shophouses for S$42.8 million from the Singapore unit of Japanese shipping line K Line in late 2014, it spent a further S$2 million refurbishing the assets. This was completed in September 2015.

The property is being offered for sale with existing tenancies.

Kitchen and bath fixtures manufacturer Kohler has leased most of the space for its experiential product showroom on the ground floor and its headquarters on the upper floors.

Fat Prince, an upscale Middle-Eastern restaurant and bar serving a modern interpretation of Turkish cuisine and cocktails, is the other ground-floor tenant.

JLL also recently brokered the sale of two adjoining shophouses at 29 & 31 Tanjong Pagar Road at S$21.8 million. This works out to S$2,400 psf on the GFA of 9,081 sq ft. The shophouses are on a single plot of land with a land area of 2,970 sq ft and with 99-year leasehold tenure from December 1994, reflecting a balance tenure of 76.5 years.

The gross yield on this fully-let property is close to 3 per cent. The fully-leased asset comprises four levels and an attic. The ground level is tenanted to Todamgol Korean Restaurant while the upper floors are leased to various office tenants.

The S$2,400 psf being paid by an institutional investor for this asset is higher than the S$2,166 psf paid by 8M Real Estate last year for five adjoining shophouses at 15, 17, 19, 21 and 23 Tanjong Pagar Road. At the time, the ground floor was vacant and 8MRE spent about S$1 million to spruce up the asset and has brought in three tenants on the ground level - Kilo Lounge, Korean-style tapas bar and restaurant Hansul Korean Dining Bar, and Gourmet Marketplace, an all-day dining bistro.

On the second floor, Yoga Movement remains a tenant; another tenant coming in soon on this level is high-intensity gym Firestation fit.

8MRE has clinched music streaming giant Spotify as tenant for the third level.

The fourth and mezzanine levels remain leased to Adelphi Digital.

A shophouse market watcher suggested that 8MRE's success in leasing its asset may have spurred the buyer of the neighbouring Nos 29 & 31 to pay a higher psf price.

Mr Lee declined to identify the buyer and seller. However, BT understands the seller is an entity controlled by tycoon Ding Jack Sung, who hails from Malaysia, and his family.

In another recent transaction, SilkRoad Property Partners bought 50 and 74 Tras Street at S$9.2 million and S$11.3 million respectively from veteran investor Stanley Quek's Region Development; the deal was brokered by Krystal Khor of Mondania and Simon Monteiro of Savills.

In the Kampong Glam Conservation Area, Fragrance Group boss James Koh Wee Meng in his private capacity is buying five joining freehold shophouses at 17, 19, 21, 23 and 25 Baghdad Street at nearly S$19 million or about S$2,660 psf on GFA. This translates to a gross yield in the region of 2.5 per cent for the asset, which is fully leased to various F&B and shop tenants.

The five shophouses sit on separate adjoining plots totalling 4,892 sq ft land area forming on an island site. Their total GFA is 7,137 sq ft.

Sammi Lim of CBRE brokered the deal, which was sealed through an expression of interest exercise that closed on March 21.

Separately, a portfolio of 22 shophouses in Joo Chiat Place, Tembeling Road and Killiney Road estimated to be worth about S$80 million is coming to the market soon. The portfolio, owned by Teo Siok Guan Pte Ltd, is to be marketed by Mondania and Savills.

The Business Times

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