Fortuna Hotel, a 106-key hotel next to Farrer Park MRT Station has been put up for sale at a guide price of S$98.8 million reflecting S$932,000 per key or S$2,060 per square foot on Gross Floor Area
CBRE announced on October 28 that it has been appointed as the exclusive marketing agent for Fortuna Hotel, a 106-key hotel at 2 Owen Road, right next to the Farrer Park MRT station. The sale will be by way of a public tender exercise which will close on 10 December 2020 at 3pm.
Located at a prominent junction along Owen Road and Serangoon Road, Fortuna Hotel occupies a freehold site of 8,332 square feet. Based on the Master Plan 2019, the site is zoned “Hotel” with a gross plot ratio of 3.0.
Spanning seven storeys with an estimated gross floor area of 47,990 square feet, Fortuna Hotel offers 106 rooms with sizes ranging from 17-49 square meters. The hotel currently comprises one restaurant and four retail shops on the first storey as well as a basement carpark.
The guide price for the subject property is S$98.8 million. This works out to approximately S$932,000 per key or S$2,060 per square foot on the current gross floor area. Foreigners are also eligible to purchase the subject property and there will be no imposition of Additional Buyer’s Stamp Duty (ABSD) or Seller’s Stamp Duty (SSD).
Mr Clemence Lee, Senior Director of Capital Markets at CBRE, says, “Fortuna Hotel ticks all the boxes that investors and owner-occupiers seek in a mid-sized hotel – a strategic location in a popular tourist destination and commercial hub; a coveted freehold tenure; a palatable investment quantum of circa S$100 million with over 100 keys; a MRT station right next door and a short-drive distance from the Changi Airport and the Orchard Road shopping belt. Having been personally involved last year in the sale of the next-door Claremont Hotel which has similar qualities, I’m confident that Fortuna Hotel will strongly appeal to astute investors – local and foreign alike – who have a long term investment horizon.”
The pool of investors includes real estate funds, family offices, hotel operators and high net worth individuals.
Mr Lee continues, “As the property is to be sold with vacant possession, the new owner can immediately carry out asset enhancement initiatives to transform the subject property into an iconic or stylish boutique or select-service hotel. Furthermore, at the current average room size of 26 square meters which is considered spacious for a mid-sized hotel, there is capacity to increase the number of rooms. Alternatively, the new owner can also consider converting the hotel into a co-living or serviced apartment development.”
He adds, “As the number of COVID-19 cases worldwide are slowly being brought under control and with people continuing to observe hygiene and safety, there is hope that travel between more countries will be in the cards. As it stands, Singapore has been gradually easing border restrictions and starting or exploring travel resumption with several countries such as Australia (excluding Victoria), Hong Kong, Macau and Vietnam.
“Hence, we opine that it is a timely opportunity now to purchase Fortuna Hotel. Given that it will likely take up to two years to define the development’s new positioning and to conduct asset enhancement works, the property’s completion then should coincide with the recovery of tourism in Singapore as the economy gradually moves back to normalcy.”
Comparable freehold hotel transactions include The Claremont Hotel which was sold in Q1 2019 at S$68 million (S$755,000 per key or S$2,222 per square foot on on GFA); Wangz Hotel which was sold in Q4 2018 at S$60 million (S$1.46 million per key or S$2,424 per square foot on GFA); and Wanderlust Hotel which was sold in Q3 2018 at S$37 million (S$1.28 million per key or S$2,387 per square foot on GFA).
Meanwhile, recent freehold hotel land transactions include Min Yuan Apartments, which was transacted at S$160.6 million (S$2,631 psf ppr) in Q3 2019 and Waterloo Apartments, which was transacted at S$276 million (S$2,721 psf ppr) in Q4 2018.
In addition to being strategically located in Farrer Park, Fortuna Hotel has an added advantage that the locality is gradually transforming into a commercial and medical hub with the presence of Connexion which houses the Farrer Park Medical Centre and Farrer Park Hospital, the upcoming Centrium Square, a commercial development comprising retail, medical suites and office space, as well as Uptown @ Farrer, a mixed-use development that comprises retail and residential units, and a serviced residence.
The residential plot at the nearby Northumberland Road, which has been identified as one of the Confirmed List sites under the Government Land Sales (GLS) program in 2020, is poised to yield circa 405 dwelling units upon completion and this will further add vibrancy to the vicinity.
Fortuna Hotel is conveniently connected to the rest of the island via Pan Island Expressway, Central Expressway and East Coast Parkway. Orchard Road and Raffles Place are a short 10-minute drive away, while Changi Airport is a 20-minute drive away.
Mr Paul Ho, Chief Mortgage Officer at iCompareLoan, said, “Fortuna Hotel is in a strategic location but it is unclear if hotel sector’s recovery will make a strong rebound after the circuit breaker period. Since this is the downtime for most hoteliers, they should take this opportunity to review their business strategies and position themselves for the eventual upturn.”
He added, “What they should do is, develop a pricing strategy to make their hotel more attractive once demands returns. Pricing room rates competitively is important as rooms priced lower would mean a slower hotel recovery for the real estate owners and investors.”