Ravi Chandran
Fragrance Victory, wholly-owned subsidiary of Fragrance Group. has acquired Min Yuan Apartments at 62 Waterloo Street for S$141 million. Fragrance Victory already owns the adjacent land plot located at 64 Waterloo Street.
Subject to obtaining the necessary approvals, the group intends to redevelop the two properties together for a combined comprehensive hotel development, which will have a total land area of 2,694 square meters and a gross floor area of 11,315 square meters.
The costs of the above acquisition and development will be funded through internal funds and borrowings. This transaction is not expected to have any material impact on the earnings and net tangible assets of the company in FY2019.
Min Yuan Apartments sits on a 999-year leasehold site of approximately 14,629 square feet. While the site is currently zoned for “Residential with Commercial at 1st storey” use under the 2014 Master Plan, the site can be redeveloped to accommodate a hotel building at a plot ratio of 4.2, or with a maximum permissible gross floor area of approximately 61,443 square feet, subject to re-zoning guidelines and conditions fulfilment, based on URA Outline Planning Permission advice.
Galven Tan, Executive Director, Capital Markets and Residential Services of CBRE said at the point of launching the sale of Min Yuan Apartments, “The subject property presents a timely opportunity for buyers to capitalize on the government’s Draft Master Plan 2019 announcement to further invigorate and anchor the Bugis, Bras Basah, Fort Canning and Civic District as a cultural and lifestyle destination steeped in arts and heritage. Upon redevelopment, the future hotel development will enjoy a panoramic unblocked view of Singapore’s CBD skyline and Fort Canning Park.”
“Singapore remains a top investment market in the region. Against the backdrop of increasing tourism arrivals which grew 6.2% YoY to 18.5 million visitors in 2018, investment demand for hotel assets have risen and the momentum has continued into 2019. We have been receiving more enquiries for hotel opportunities; and in fact, the pre-marketing activities for the subject site have drawn strong interest due to its locational attributes, as well as the buzz around the recent hotel land sale transactions.” added Mr Tan.
Min Yuan Apartments sold at $4 million below the asking price of $145 million.
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Strategically located in the heart of Singapore’s art, cultural and heritage district, the Waterloo Street property is close to many landmarks, including National Museum of Singapore, Singapore Art Museum, Stamford Arts Centre, National Design Centre, Singapore Management University, School of the Arts and Nanyang Academy of Fine Arts. The site is well-served by four MRT stations – Bras Basah, Bencoolen, Bugis and City Hall – all of which are located within 500 meters. Amenities are easily accessible at the nearby Bugis Junction, Bugi +, Bugis Village and DUO, among others.
The public tender exercise for Min Yuan Apartments site closed on 3 September 2019 at 3pm.
En Bloc Sales Process Singapore – A Definitive Step-by-step Guide
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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Commercial properties such as the Waterloo Street site 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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