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Property News16 Apr 2018

Shophouse deals cross S$500m year to date

The buzz in the shophouse market continues, with deals crossing the S$500 million mark year to date.

Club Street Shophouse

Industry players point to a high likelihood that total transactions this year will match, if not surpass, last year's S$1 billion, citing strong demand especially for conservation shophouses in Districts 1 and 2.

A 999-year leasehold corner shophouse at 64 Club Street in the Central Business District has just been put on the market with an indicative guide price of around S$25 million. This works out to S$4,450 per square foot based on the estimated built-up area of 5,618 sq ft.

The 64 Club Street property is owned by a company affiliated to Clifton Partners, which completed a major refurbishment of the asset costing about S$3 million in 2016.

The extensive works included refurbishing the facade, installing a new lift, changing the flooring and exposing the beams. "The interiors are tastefully designed and completed with opulent solid teak wood and travertine marble finishes," said JLL, which is marketing the property.

Comprising two storeys, a basement and an attic level, the entire property is permanently approved for restaurant use. Caffe B, a Japanese-Italian fusion restaurant, occupies the entire shophouse under a long lease.

The Business Times understands from industry sources that based on the S$25 million indicative price, the gross yield would be slightly above 3 per cent.

The shophouse, which sits on land area of 2,250 sq ft, has two entrances: on Club Street and Ann Siang Road. It used to be the home of Pondok Peranakan Gelam Club, which served as a communal home for Baweanese immigrants until the 1960s.

Clifton commissioned Malaysian design firm Sculptureatwork to create a 3D steel-rod wall mural mounted on the side facade of the shophouse. The mural depicts a series of caricatures featuring familiar characters from Singapore's past such as the coolie, the samsui woman and the rickshaw puller.

The property is next to the Chinese Weekly Entertainment Club, a private millionaires' club with its history going back to 1891. Located in the Telok Ayer Conservation Area, 64 Club Street is fully zoned for commercial use, which means that foreigners are eligible to buy.

JLL is marketing the property through a tender exercise that will close on June 1. "Having been beautifully restored and fully let to an upscale restaurant, 64 Club Street presents a timely opportunity to parties looking to own a trophy 999-year leasehold, income-producing asset in a vibrant F&B and lifestyle destination," said Clemence Lee, associate director of capital markets at JLL.

"Coveted 999-year leasehold shophouses located in the exclusive Club Street area are highly sought after and seldom available for sale."

Another affiliate of Clifton Partners is buying 70 Duxton Road for S$7.55 million from a company owned by Alan Choe, a former head of the Urban Redevelopment Authority and also former chairman of Sentosa Development Corporation.

A few months ago, the group also bought the neighbouring 71 and 72 Duxton Road for S$7.35 million and S$7.3 million, respectively, in separate deals.

All three shophouses have three levels and an attic, and are on sites with 99-year leasehold tenure starting September 1988, reflecting about 69.5 years balance lease tenure.

Clifton Partners is owned by Singaporean Zain Fancy.

The sale of 70 Duxton Road was brokered by JB Lin, associate director of boutique property agency Corporate Visions. "There is strong demand for conservation shophouses in Districts 1 and 2 from high net worth individuals - both locals and foreigners - as well as boutique property funds. These investors believe the limited supply in this asset class bodes well for long-term capital appreciation," he said.

District 1 includes places in the CBD such as Amoy Street and Boat Quay, while District 2 includes the Tanjong Pagar and Duxton areas.

In another deal, a seasoned property investor is acquiring a three-storey shophouse at 77 Amoy Street for S$25 million from a property fund. The price works out to S$3,500-S$3,600 psf on the estimated built-up area for the 999-year leasehold property. The gross yield is understood to be 2.7-2.8 per cent with potential for further upside given the improving office rental market.

The first level is leased to an Italian restaurant and the upper-floor space, to office tenants.

The buyer of 77 Amoy Street recently sold the neighbouring 75 Amoy Street at over S$18 million - working out to slightly over S$3,900 psf on built-up area. The buyer is a company controlled by a China citizen.

While the mood in the shophouse market has improved, CBRE director of capital markets Sammi Lim said: "Investors prefer to review more options before committing to a purchase as they seek a mid to longer-term view on investments. Savvy investors know that this asset class will hold value due to its scarcity.

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