Two three-storey conservation shophouses along Tras Street for sale via Expression of Interest
CBRE announced on Jan 7 that it is pleased to launch for sale via Expression of Interest two three-storey conservation shophouses with attic located along Tras Street.
The larger shophouse unit has a land area of approximately 1,494 sq ft and total floor area of approximately 4,257 sq ft. Located across the street, the smaller unit has a land area of approximately 1,298 sq ft and total floor area of approximately 3,852 sq ft. Both shophouses have a 99-year leasehold tenure and are zoned for commercial use in the Chinatown-Tanjong Pagar Conservation Area under the 2019 Master Plan.
The two three-storey conservation shophouses, which are within a short 260 m from Tanjong Pagar MRT Station, are fully leased to established food and beverage operators on the ground floor and SOHO users on the upper floors.
The guide price for the larger shophouse is S$12 million, while the smaller shophouse is S$10.8 million. These work out to approximately S$2,800 per sq ft on the total floor area of each shophouse. Interested parties are welcome to purchase the shophouses either collectively or individually.
Mr Clemence Lee, Senior Director of Capital Markets at CBRE, says, “On the back of rising prices of 999-year or freehold CBD shophouses that have been transacting between S$3,500 per sq ft and S$4,000 per sq ft on total floor area in the past year, we have started to observe investors’ interest shifting to well-located 99-year leasehold shophouses which are believed to offer better value and higher yields.”
Recent transactions of 99-year leasehold shophouses include 34,36 & 38 Tanjong Pagar Road which were sold collectively in December 2019 at S$16.35 million or approximately S$3,000 per sq ft on total floor area, and 76 Pagoda Street which changed hands in July 2019 at S$13.3 million or approximately $3,500 per sq ft on total floor area.
Mr Lee adds, “At the attractive price of S$2,800 per sq ft, coupled with the subject properties’ proximity to the Tanjong Pagar MRT station, strong tenant covenants and attractive gross yields of up to 3.5%, we are confident that these two assets will attract strong investor interest.”
Tanjong Pagar is one of Singapore’s trendiest locales, characterized by its myriad of popular F&B, retail and lifestyle offerings. It is home to several Michelin-star restaurants such as Burnt Ends, Capital, Issan Thai Food, Otto, Ushidoki Wagyu Kaiseki and Whole Earth. Along Tras Street, Six Senses Maxwell, a luxurious boutique hotel and ST Signature, a new co-living operator, have just opened doors in end 2019. New commercial developments in the area include Guoco Tower, Frasers Tower and ASB Tower that is scheduled to be completed this year. These changes are part of URA’s urban renewal efforts to transform the vicinity into a live-work-play destination.
The Expression of Interest marketing exercise for the prime two three-storey conservation shophouses will close on 12 February 2020, Wednesday, at 3pm.
Mr Paul Ho, chief mortgage officer at iCompareLoan said, “properties such as the two three-storey conservation shophouses are perceived as attractive investments because they can hold their values because of their location and the freehold nature of the properties. Shops and shophouses are also valued because they give prominent presence to a business entity for them to be visible in a highly competitive environment.”
“Tras Street today is lined with many shophouses, many of which are two- and three-storey buildings. These shophouses, some of which are conserved pre-war buildings, are home to shops, eating places, pubs, boutiques and offices. The street is in fact a well-known night spot because of its string of bars. O’Bama’a Irish Pub is an example of one of the thriving nightspots on Tras street. Being part of the Tanjong Pagar Conservation area, and found within the historic district of Chinatown, there are efforts to bring back the old charms of Chinatown to Tras Street,” Mr Ho added.
Tras Street is a street located in Tanjong Pagar in the Outram Planning Area and Downtown Core in Singapore. The road connects Enggor Street and Gopeng Street to Cook Street, and is intersected by Wallich Street. This location makes the two three-storey conservation shophouses there attractive investment opportunity for buyers and investors.
The biggest gainers following the 2018 property cooling measures is likely be owners of strata portfolio of offices and shophouses approved for commercial use said one research. 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 and encumbrances.
Properties such as the two three-storey conservation shophouses 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.
Buyers or investors who are interested in the two three-storey conservation shophouses should consider approaching a mortgage broker who will be able to guide them through the best commercial loans that are available for the purchase of the prime properties.