CBRE on 9 March presented an investment opportunity to acquire a 100% ownership in Devonshire Apartment, a freehold, income-producing serviced apartment located at 17 Devonshire Road.
The sale will be conducted via an Expression of Interest exercise, which will close on 6 April 2021 at 3pm. CBRE is the exclusive marketing agent for the Devonshire Apartment site.
Fully leased to a single operator at present, Devonshire Apartment is an eight-storey serviced apartment tower that comprises 12 units of some 23,233 square feet in total gross floor area.
The tower sits on a rectangular freehold land of approximately 11,317 square feet and enjoys a wide frontage of approximately 18.5 meters on Devonshire Road.
According to the Master Plan 2019, the site is zoned for “Residential” use, with an allowable plot ratio of 2.8 and a maximum height of up to 36 storeys.
The guide price for 17 Devonshire Road is S$66 million, which works out to S$2,356 per square foot per plot ratio based on the maximum allowable gross floor area of 31,688 square feet, excluding the 7% bonus gross floor area for balconies.
The development charge payable to maximize the plot ratio is estimated to be approximately S$8.65 million, subject to the authorities’ confirmation on the development baseline and review of DC rates every March and September.
Mr Michael Tay, Head of Capital Markets, Singapore at CBRE, said, “Devonshire Apartment presents investors with a practical investment opportunity, given the options available upon acquisition. The successful buyer can choose to continue to enjoy a stable stream of reasonable income as the property is currently fully leased to a single serviced apartment operator. Alternatively, there is also a redevelopment option for the successful buyer to leverage on the under-utilised gross plot ratio.”
Mr Tay added, “We rarely come across well-located serviced apartments within proximity to the prime Orchard Road shopping belt made available for sale, yet still at a palatable investment quantum of under S$100 million made available for sale. Therefore, we expect this site to garner strong interest from both local and foreign investors and hospitality end-users, as well as developers who are starting to look out to replenish their land banks or targeting the luxurious residential market.”
Nestled in an affluent residential enclave along Devonshire Road, Devonshire Apartment is a short walk to Somerset MRT station. A stone’s throw away from Orchard Road and Robertson Quay, nearby landmarks include 313 Somerset, Orchard Gateway, Hotel Jen and Fort Canning Park.
Commenting on the sale by Expression of Interest exercise of the District 9 freehold residential apartment, Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “the sale of Devonshire Apartment comes at a time when URA statistics showed that private residential property prices grew at an increasing rate over several quarters.”
“The market sentiments are quite strong at this moment and the property is also in a very attractive location. All these factors will add to the factors as to why this property will fetch prices close to the guide price,” he added.
Data released by the Urban Redevelopment Authority on Friday (15 February) showed that 1,609 new private homes (excluding Executive Condos) were sold in January, up by 32.2% month-on-month (MOM) from the 1,217 units that were shifted in December 2020. On a year-on-year (YOY) basis, developers’ sales grew 159.5% from the 620 units (excl. ECs) transacted in January 2020, becoming the top January monthly sales since 2013.
In January, developers sold 489 ECs – which are a hybrid of public and private housing – more than 10 times the 48 sold in December, and more than 20x the 20 ECs sold in January 2020, due to a new launch of Parc Central EC at Tampines which sold 417 units. This brings total developer sales (including ECs) in January 2021 to 2,098 units, up 65.8% MOM and 227.8% YOY.
Mr Ho noted that prices of properties in District 9, has risen less compared to real estate in Rest of Central Region (RCR) for many years now, and that the price differential is narrowing.
“Either RCR is overpriced or CCR is underpriced. For investors who are looking at superlatives, definitely the best of the best will do. Savvy investors (those who already have more than 1 property) will stay away from the market as the prices are crazy and the fundamentals are weak and there is huge supply in the pipeline. Current investors, such as those that bought The M, a 522-unit 99-year leasehold project in the CBD comprise of a lot of foreigners. I doubt how they will recover their investment given the low rental yields, rising interest costs.
“I got a sense that it is more a portfolio diversification play given that they feel bullish about the Singapore Property market – given that the malaise of over supply has been digested for many years. So, this is more about the confidence and the sentiments. The fundamentals of the Singapore property market appears to be weak.”
Mr Ho believes that value buys in the property market right now are are landed inter-terrace house. He notes that the per square feet price on the built-up area in such properties are usually less than $1000. He also advises those that are looking for a property in District 9 to get help from property agents.
If you are home-hunting in District 9, you should seek the help of a good panel of property agents and the mortgage consultants as they can help you with affordability assessment and a promotional home loan. The services of professionals like mortgage loan experts are free. Their analysis will give best home loan seekers better ease of mind on interest rate volatility and repayments.