Ravi Chandran
Savills Singapore on 28 August announced the launch for sale by public tender a freehold conservation shophouses cluster located along Smith Street, right in the heart of the historic and vibrant district of Chinatown. The cluster of 3 adjoining shophouses in Smith Street lies between South Bridge Road and New Bridge Road, and is served by several MRT stations.
Sited within the popular street block bordered by New Bridge Road, Temple Street, Trengganu Street and Smith Street, the corner plot is conveniently located within 2 to 5-minutes’ walk from the Chinatown and the upcoming Maxwell MRT stations respectively. Ample carparking can be found at the Chinatown Complex as well as public street parking in the near vicinity.
Zoned full commercial, the three contiguous shophouses (3-storey with attic) with total Gross Floor Area of about 9,500 sq ft, occupy a combined land area of approximately 2,784 sq ft. Built in the pre-war era, it was constructed with reinforced concrete and in-fill bricks with a lift and 2 staircases.
The freehold conservation shophouses cluster currently enjoy 100% occupancy with approved restaurant use on the first and second floors, backpackers’ hostel on the third floor and a TCM clinic at the attic.
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The freehold conservation shophouses cluster is situated in a popular hotspot known for its bustling mix of traditional eateries and cafes, souvenir stores, interesting artefacts and tourist attractions like the iconic Sri Mariamman Temple and Buddha Tooth Relic Temple & Museum. It enjoys high footfall with its prominent frontage along Smith Street opposite the Chinatown Complex and where the popular Chinatown Food Street is. The pedestrian mall stretching from Sago Street and Smith Street through Trengganu Street to Pagoda Street provides an endless flow of shopper traffic.
“Recent shophouse transactions in District 1 continue to shore up prices and lend proof to shophouses being an extremely attractive asset class. These 3 shophouses’ excellent location along the Chinatown Food Street, smack in the heart of a tourist hotspot, puts it right up there amongst the creme de la creme of shophouses. It presents an unparalleled opportunity for the astute investor to own a rare freehold collectible in a buzzling F&B and tourist destination.” said Donald Goh, director of investment sales at Savills Singapore.
“We have received good enquiries for the shophouses even before the official tender launch and we expect more to come in the weeks leading to the close of tender. We are confident that the uniqueness and attractiveness of such a prominent cluster will set a new price benchmark in this much sought-after heritage conservation neighbourhood”, added Suzie Mok, senior director of investment sales at Savills Singapore.
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The guide price for the freehold conservation shophouses cluster is about $3,500psf or $33.25million on a built-up area of about 9,500 sq ft which reflects a gross yield of close to 2%. This bodes well with recent notable shophouse transactions such as 64 Club Street which was sold for about $3,880psf, 77 Amoy Street for about $3,500psf and 75 Amoy Street for about $3,900psf on built up area.
The tender for the freehold conservation shophouses cluster in the heart of Chinatown closes on the 25th September 2018 Tuesday at 3pm.
Paul Ho, the chief mortgage consultant at iCompareLoan said: “Properties such as the freehold conservation shophouses cluster 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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