Ravi Chandran
CBRE on Sep 17, launched the Public Tender sale of 65 South Bridge Road, a 4-storey 999-year commercial shophouse, strategically situated within the Central Business District (CBD) of Singapore. The property sits on an approximately 1,402 sq ft site with a total gross floor area of approximately 4,662 sq ft. The 4-storey full commercial shophouse enjoys 100% occupancy rate with potential to convert its use to ‘Hostel’, subject to authority’s approvals.
Centrally located between Clarke Quay and Boat Quay, against a backdrop of modern skyscrappers, the area where the 999-year commercial shophouse is located is an up-and-coming work-play lifestyle destination well-frequented by locals and tourists alike.
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The strip of shophouses offers an eclectic mix of commercial, entertainment, cultural and lifestyle attractions with ready catchment of customers and voluminous traffic flow from the CBD. The property also enjoys excellent accessibility being a short stroll from Raffles Place financial district and a mere 180 metres away from Clarke Quay MRT station.
Sammi Lim, Director, Capital Markets, CBRE said “Given the recent interest in commercial shophouses, we expect the property to attract strong interest from the market. Shophouses in Boat Quay with excellent street frontage are limited, especially those with 999-year tenure. We expect interest from property funds, private equity, contractor-developers, family offices and high net-worth individuals, both local and overseas, who are seeking quality assets to which they can add value for capital and rental appreciation. With naming rights, this property is also ideal as corporate offices for law firms, architectural firms, tech and creative outfits; as well as hotel or hostel operations and family businesses.”
Ms Lim added, “Following CBRE’s recent successful sale of 9 Hongkong Street, a 99-year conservation shophouse at $2,513 per square foot over the gross floor area, we have observed strong interest in compelling shophouse opportunities in the vicinities of Boat Quay and Circular Road due to the area’s vibrancy, making it the next investment hotspot with strong growth potential. Recent shophouse transactions in the immediate vicinity such as the portfolio of shophouses comprising of 61, 77 Boat Quay, 17, 45, 46 Circular Road and 52 Boat Quay recorded a price range of $3,150 to $3,388 per square foot.”
The guide price for the 999-year commercial shophouse, at $13.8 million or $2,960 per square foot over the gross floor area is certainly attractive.
As a commercial property, this public tender is open to both locals and foreigners with no Additional Buyer’s Stamp Duty (ABSD) imposed on the purchase of the property.
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CBRE is the sole marketing agent for this Public Tender exercise of the 999-year commercial shophouse. The Public Tender closes on 19 October 2018, Friday at 3 pm.
An earlier report by JLL said that the biggest gainers following the new property cooling measures will likely be owners of strata-offices and shophouses approved for commercial use. The real estate service company said: “The government’s swift response to curb home price growth has tampered the prospects of residential properties as attractive investments. Investors looking for alternatives to park their money could divert their attention to the strata office and shophouse markets as they are not subjected to this round of purchase or sales restrictions/encumbrances.”
Paul Ho, the chief mortgage consultant at iCompareLoan said: “Properties such as the 999-year commercial 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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He added: “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 investors.”
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