Singapore Realtors Inc (SRI), announced on July 17 that the owners of Singapore Shopping Centre has launched a en bloc sale attempt. SRI is the sole marketing agent for the en bloc sale attempt of Singapore Shopping Centre.
The reserve price for the en bloc sale attempt of Singapore Shopping Centre is $255 million.
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Under the 2019 Draft Master Plan the site at which Singapore Shopping Centre sits, is zoned for commercial use and has a plot ratio of 4.2+ u, which allows the purchaser greater flexibility to redevelop the site to include offices, a retail building, commercial schools, hotels, banks, or restaurants. Both locals and foreigners may bid for the en bloc sale, and additional buyer’s stamp duty will not be applicable to the sale.
Singapore Shopping Centre is a 99-year Leasehold commercial property located at 190, Clemenceau Avenue in District 9. Singapore Shopping Centre is close to Dhoby Ghaut MRT and Somerset MRT. Dhoby Ghaut MRT interchange station in particular, connects to the North-East, North-South, and Circle Lines. The interchange will also connect to the upcoming Thomson-East Coast Line by 2021. It is near to several bus stops located at Clemenceau Avenue. Singapore Shopping Centre is accessible via Clemenceau Avenue, Penang Road and Penang Lane.
Singapore Shopping Centre is near to several eateries located at nearby buildings such as Park Mall, Plaza Singapura and Dhoby Xchange. It is also within reasonable distance to Cold Storage, Jason’s Market Place and Sheng Siong Supermarkets. It is also close to Park Mall, Plaza Singapura, Concorde Hotel & Shopping Mall, The Cathay, Orchard Plaza, Orchard Point, Cuppage Plaza and Orchard Central for an array of amenities such as grocery and retail shopping, banks and more.
Singapore Shopping Centre is located next to the upcoming 9 Penang Road, which is a redevelopment of the former Park Mall by joint-venture partners SingHaiyi Group, Haiyi Holdings, and Suntec (PM).
The tender for Singapore Shopping Centre closes on Sep 9.
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 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.
Commercial properties such as Singapore Shopping Centre 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.
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 discerning investors.
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