Ravi Chandran
The Neil Road conserved shophouse could potentially benefit from the government’s plans to rejuvenate the CBD area under the Draft Master Plan 2019
Colliers International on Aug 26, put up a shophouse at 65 Neil Road for auction under owners’ sale on 30 September 2019. The shophouse being limited in stock and availability in Singapore – present rare investment opportunities and potential upside given its tight supply and investor interest in these real estate segments.
A conserved 2-storey shophouse with attic at 65 Neil Road will be offered for sale via auction by the owner for at least $8 million, which translates to about $2,800 psf based on the Gross Floor Area (GFA) of 263.24 sq m (2,833.52 sq ft). It is situated within the Chinatown-Tanjong Pagar Conservation Area and has a land area of 131.3 sq m (1,413 sq ft).
The property, which is on the cusp of the central business district (CBD), could also potentially benefit from the government’s plans to rejuvenate the city centre under the Draft Master Plan 2019. The various initiatives – such as the CBD Incentive Scheme and plans to build more housing in the Central Area – lined up by state planners are aimed at injecting a wider diversity of uses, improving connectivity, and adding more buzz to downtown Singapore.
Colliers understands that the owner has engaged an architect to review potential additions and alteration works, which could add an extra 55.97 sq m (about 602.5 sq ft) to the GFA. This would bring the overall pricing down to below $2,500 psf.
The Neil Road conserved shophouse has a 99-year leasehold tenure with effect from 4 July 1989.
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Mr Tan added, “Shophouses have always been a sought-after class of real estate among investors owing to their prime locations, heritage charm and scarcity. Those in prime areas are considered a good investment option owing to their superior location, healthy pedestrian traffic, and the vibrant activities in the vicinity. Generally, shophouses also see good leasing demand and enjoy relatively good return. We have definitely seen heightened interest for such properties since new cooling measures were introduced in July 2018.”
The ground floor of the Neil Road conserved shophouse is currently tenanted to an entertainment establishment which has been leasing the space for the past 15 years. Meanwhile, the lease for the second floor – which is tenanted to another occupier – will expire at the end of 2019.
Subject to evaluation and approval by the Urban Redevelopment Authority, the second floor of the Neil Road conserved shophouse can be used for restaurant, clinic, commercial school, gym/fitness centre, night club, karaoke, student hostel, and residential use, potentially co-living concepts.
Owing to the shophouse’s commercial-use zoning, the additional buyer’s stamp duty (ABSD) and seller’s stamp duty (SSD) are not applicable.
The Neil Road conserved shophouse will be offered for sale at an auction to be held at 2.30 pm on 30 September at Amara Singapore, Level 3, Connection Room.
With the winding down of the success of residential en bloc sales, commercial properties are now seen as being attractive to investors. The government’s swift response to curb home price growth in July last year, has tampered the prospects of residential properties as attractive investments. Investors looking for alternatives to park their money could divert their attention to shophouses as they are not subjected to this round of purchase or sales restrictions.
The biggest gainers following the last property cooling measures are 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.
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Properties such as the Neil Road shophouse 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.
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