Ravi Chandran
A freehold shophouse at 28 Stanley Street has been put up for sale in an expression of interest exercise.
The four-storey conservation shophouse features a roof terrace balcony and occupies a land area of 1,729 sq ft with a gross floor area of about 6,485 sq ft, said real estate agency Auctionjia.
4-storey freehold shophouse is located in Telok Ayer, in the heart of Central Business District.
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The freehold shophouse is approved F&B for ground and first floor and is tenanted with immediate rental income. Auctionjia said foreigners are eligible to purchase the freehold shophouse. Additional Buyers Stamp Duty (ABSD) and Seller’s Stamp Duty (SSD) are not applicable for the sale of this property.
Referring to the record price of $4,259 per sq ft that was fetched at the sale of the nearby 21 Boon Tat Street shophouse, AuctionJia said it is looking to at least match the price.
With a gross floor area of about 6,485 sq ft, the freehold shophouse is expected to close at $27.6 million.
The freehold shophouse is a stone’s throw away from Telok Ayer MRT station. The expression of interest exercise closes at 2pm on Wednesday (Dec 12).
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With the winding down of the success of residential en bloc sales, commercial properties are now trying to join in the bandwagon. Many commercial en bloc sale attempts fail because the asking prices are often too high. Two critical factors affecting the success of commercial sites going en bloc are pricing and location. Older commercial buildings especially, may see a need to catch the current wave as an exit strategy as their rental yields come under pressure due to competition from newer commercial buildings.
The government’s swift response to curb home price growth in July, 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 new property cooling measures is 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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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.”
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.”
https://www.icompareloan.com/resources/good-property-agents-qualities-look-find/
He said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
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