CBRE on 24 September, launched the Expression of Interest sale of a rare portfolio of 9 HDB commercial units comprising shops and shophouses.
The 9 HDB commercial units are strategically located in the dense and mature residential estates of Ang Mo Kio, Toa Payoh, Bedok, Tampines, Changi Village, Yishun and Ubi. They are well located in their respective town centres, enjoy extremely high pedestrian traffic, and are close to MRT stations, bus interchanges, food centres, coffee shops and supermarkets.
The details of the 9 HDB commercial units are as follow:
|1||Block 4 Changi Village Road, #01-2086||1,420 sq ft|
|2||Block 201D Tampines Street 21, #01-1147||818 sq ft|
|3||Block 631 Bedok Reservoir Road, #01-930||1,604 sq ft|
|4||Block 214 Bedok North Street 1, #01-173||1,620 sq ft|
|5||Block 301 Ubi Avenue 1, #01-251||581 sq ft|
|6||Block 301 Ubi Avenue 1, #01-247||2,153 sq ft|
|7||Block 177 Toa Payoh Central, #01-124/126||2,776 sq ft|
|8||Block 727 Ang Mo Kio Avenue 6, #01-4256||1,636 sq ft|
|9||Block 925 Yishun Central 1, #01-215||753 sq ft|
Sammi Lim, Director, Capital Markets, CBRE said, “HDB (Housing and Development Board) shophouses are an iconic part of Singapore’s nation building, and remain an indispensable part of everyday life for many Singaporeans. It is rare for a HDB commercial portfolio in mature estates to be available for sale. We believe it will appeal to investors and end-users, especially when there are only about 8,500 HDB shophouses that can be resold on the private market. The units enjoy prominent road frontages, and are highly versatile as the units allow the buyers to explore sub-division of the spaces for rental to multiple tenants.
CBRE said that the 9 HDB commercial units are currently fully tenanted; and that it expects keen interest from family offices, private equity funds, real estate funds, high net worth individuals, who are seeking income-producing properties for immediate rental income, with the potential of capital appreciation in the medium to long term. The 9 HDB commercial units are also expected to attract end-users who are on the lookout for shops to purchase and operate small businesses.
Lim said: “With the successful sale of the 7-Eleven portfolio earlier this year, we expect this portfolio to be well received by the market, and the underbidders will have another opportunity to evaluate this compelling and attractive opportunity. The guide price of $34 million for the entire portfolio is a quantum that is palatable to the market. Buyers have the option to purchase the shops on an individual basis, or all the nine shophouses under one portfolio.”
CBRE is the sole marketing agent for this Expression of Interest Exercise of the 9 HDB commercial units. The Exercise closes on 31 October 2018, Wednesday at 3 pm.
Paul Ho, Chief Mortgage Consultant at iCompareLoan, said “you would normally associate HDB with residential flats. However HDB also has shophouse units which are considered commercial properties. These commercial properties are normally located with town councils or town centres near hawker centres. And some of these HDB shophouses contains residential quarters.”
Although some HDB commercial properties have living quarters attached to them, these properties are sold or tenanted out as a commercial property under a single title and deemed as non-residential. The prevailing policy that persons who buy non-subsidized flats are not allowed to concurrently own an HDB flat and private property within the minimum occupation period is applicable only to private residential property.
There are have also no restriction for foreigner/ Singapore Permanent Resident to purchase HDB commercial shops (i.e. shop with living quarters at 2nd storey or shop without living quarters) provided the individual(s) are above 21 years of age and is not an undischarged bankrupt
Mr Ho added: “Some Singapore banks will continue to check with the Monetary Authority of Singapore with regards to the treatment and classification of such property. As these properties typically have quite a number of regulations attached to it’s ownership and business use, they can be risky both for the property buyer as well as the banks who lends money out on these type of properties.
“Even though this property is treated as Commercial, many of these properties have maybe between 40 plus years to 70 plus years of remaining leases as most HDB shophouses were older designs built in the 1970s onwards. Banks are generally only lending to HDB shophouses with a minimum of 60 years of remaining lease. The maximum tenor of the loan is capped by (Remaining lease – 30 years). This is not a rule set in concrete or by regulation, but a rule that banks normally apply. ”
Property Buyer’s advice
Mr Ho said: “If for any reason HDB shophouses come in at the cheaper range of the price range, this can best be explained by the possible ambiguity of investing in such category of properties. Investors fear uncertainty and generally apply a discount to uncertainty. Banks similarly may impose either a longer processing time or some conditions on lending on such property, or stay away completely.
“The value of this investment will very much depend on the Singapore regulatory environment governing this type of housing as well as credit availability or restrictions at the point of sale. Else this asset will be purely a yield play without too much excitement on capital gains.”
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