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Bugis Cube launched for en bloc sale with reserve price of $230m

by • October 7, 2019 • Commercial EnblocComments (0)194

Bugis Cube located at No. 470 North Bridge Road, has been put up for collective sale via a Tender exercise by the appointed marketing agent, Cushman & Wakefield. Owners holding not less than 80% by share values and strata area have collectively agreed to the sale by way of public tender.

Bugis Cube is situated in the vibrant eclectic Bras Basah-Bugis neighbourhood with a mix of our heritage past and modern skyscrapers. This area is undergoing an exciting transformation with the anticipated completion of upcoming projects such as Guoco Midtown, Shaw Towers and the future residential developments at Tan Quee Lan Street and Middle Road that were both recently sold under the Government Land Sales Programme.

Other large-scale mixed used developments in the area include South Beach and Duo which were both opened in the recent past. It is also just opposite Bugis Junction and adjacent to Liang Seah Street, a popular street filled with steamboat restaurants, bars and dessert cafes.

Bugis Cube

Image credit: C&W

Presently, Bugis Cube is a 6-storey building with a basement floor car park. It has 119 strata-titled retail shops boasting a mixed of select F&B outlets, beauty, hair, nail salons and family karaoke lounge.

 

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This 999-year leasehold site has a land area of 1,079.1 sq m (11,615 sq ft approximately). According to the Master Plan 2014, the site is zoned “Commercial” with a plot ratio 4.2 and a maximum storey height of 6-storey. It has a verified Gross Floor Area of 6,188.67 sq m (66,614 sq ft approximately), equivalent to a plot ratio of 5.735.

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It is a 250 metre walk to City Hall MRT and Bugis MRT station which is an interchange Station for the East-West Line and the Downtown Line, providing easy access to occupiers and retail customers. It also has easy access from other parts of the island via the East Coast Parkway (ECP) and Marina Coastal Expressway (MCE).

The owners’ reserve price for Bugis Cube is $230 million which works out to approximately $3,452 per sq ft per plot ratio on the verified gross floor area.

Ms Annalyn Ooi, Associate Director of Capital Markets at Cushman & Wakefield said: “Such a 999-year leasehold tenure site in prime location is rarely available for sale. As the sale is with vacant possession, the prospective buyer could take the opportunity to add value to the building through asset enhancement initiatives by introducing co-working space concepts, specialty services and clinics, or convert into a boutique office building with its own naming rights.”

Shaun Poh, Executive Director, Capital Markets said “The recent sales of two commercial buildings Bugis Junction Towers and DUO have definitely further added to the growing interest in the locality”.

The tender exercise for Bugis Cube closes on 14 November 2019 (Thursday), at 3.00pm.

With the winding down of the success of residential en bloc sales, commercial properties are now trying to join in the bandwagon. Many commercial en bloc sale attempts fail because the asking prices are often too high. Two critical factors affecting the success of commercial sites going en bloc are pricing and location. Older commercial buildings especially, may see a need to catch the current wave as an exit strategy as their rental yields come under pressure due to competition from newer commercial buildings.

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The biggest gainers following the new property cooling measures is likely be owners of strata portfolio of offices and shophouses approved for commercial use. The property cooling measures affected almost all categories of buyers and is predicted to achieve its intended objectives of cooling demand and moderating price growth.

One report said investors looking for alternatives to park their money in the wake of property cooling measures, would divert their attention to the strata office and shophouse markets as they are not subjected to this round of purchase or sales restrictions/encumbrances.

Commercial properties such as Bugis Cube may be bought under personal name, but total debt servicing Total Debt Servicing Ratio (TDSR) will apply on the individual’s income on such purchases. To buy a commercial or industrial property under company name, total debt servicing ratio TDSR also applies on the individual director’s income if the company is an investment holding company or an operating company that is loss-making or does not have sufficient cash flow to servicing the repayment.

To buy a commercial or industrial property under company name where the company is well established with an existing operating business with strong financials, TDSR may be waived on the individual. However director is usually required to become personal guarantors of the loan the company undertakes. Hence this may affect the director’s other purchases, such as for buying a residential property, due to the loading from the TDSR for guaranteeing a loan.

Some banks even advertise 100 to 120% loan. This is due to a combination of working capital as well as commercial/industrial property loan, but this only applies to company with strong cash flow position. Commercial property is different from residential property and the considerations are more complex and varied, though the payoff may be worthwhile for discerning investors.

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