Porcelain Hotel in Chinatown for sale at guide price $68.8 million

The Porcelain Hotel in Chinatown to Launch for Sale – As an 84-key boutique hotel at a guide price of $68.8 million

CBRE announced on 16 November that it is launching for sale The Porcelain Hotel, an 84-key boutique hotel located at 48, 49 and 50 Mosque Street, right in the heart of Singapore’s bustling Chinatown. CBRE is the exclusive marketing agent and the sale will be by way of Expression of Interest (EOI).

The Porcelain Hotel
image: CBRE

Enjoying a lengthy road frontage of some 40 meters along Mosque Street, The Porcelain Hotel sits on a 99-year leasehold site of 6,033 square feet. Based on the 2019 Master Plan, the site is zoned for “Commercial” use.

With an estimated gross floor area of 23,041 square feet, The Porcelain Hotel offers 84 rooms across four storeys with room sizes of 8-29 square meters. The subject property features excellent specifications including concrete floors and a regular layout. There is also a spa outlet occupying some 2,500 square feet on Level 1.

The guide price for The Porcelain Hotel is S$68.8 million, translating to approximately S$820,000 per key or S$2,986 per square foot on the gross floor area, which compares favorably to recent transactions of hotels and shophouses.

Interest for hotels and hotel land has been strong over the past year. Recent hotel land transactions include Min Yuan Apartments, which was transacted at S$160.5 million (S$2,613 psf ppr), Darby Park Executive Suites, which was transacted at S$160 million (S$2,754 psf ppr) and Golden Wall Centre, which was transacted at S$276.2 million (S$2,721 psf ppr).

Recent boutique hotel transactions include Wangz Hotel, which was sold at over S$60 million (S$1.46 million per key) and Wanderlust Hotel, which was sold at S$37 million (SS$1.28 million per key). Recent shophouse transactions in the Chinatown precinct include 76 Pagoda Street at S$13.3 million (S$3,500 psf) and 31 Pagoda Street at S$16.25 million ($4,779 psf).

Interested buyers have the option of acquiring The Porcelain Hotel either with vacant possession or on a sale-and-leaseback arrangement.

Mr Clemence Lee, Senior Director of Capital Markets at CBRE Singapore, said, “During the earlier EOI exercise of Porcelain Hotel at 46,47,48,49 and 50 Mosque Street that closed in March this year, while we received multiple offers, the owner recognized that March was when the COVID situation intensified, resulting in higher levels of uncertainty ahead and hence, decided then to withdraw the property from the market.”

Mr Lee added, “We’ve started to notice over the past few months that shophouse assets, particularly those located in the CBD, still garner strong interest from boutique real estate funds, family offices and high net worth individuals. Prices have also proven resilient due to their limited supply.

“Against this background, coupled with the favorable low interest rate environment as well as the improvement and stability of the current COVID situation, we feel that it is now an opportune time to relaunch The Porcelain Hotel at 48-50 Mosque Street. For 46-47 Mosque Street, the owner’s plan is to convert the two shophouses into a high-end fusion Japanese restaurant serving hotpot and yakitori.”

On the hotel sector in Singapore, Mr Teo Junrong, CBRE’s Associate Director of Hotels and Capital Markets, commented, “Although there is a wide variety of accommodation options in Chinatown, there is still a gap for a boutique lifestyle brand that can cater to the aspiring new travelers who are willing to pay a premium for the product and location. With a well-thought-out concept, renovation and repositioning plan, The Porcelain Hotel can fill this gap and capture the targeted segment.”

Mr Teo adds, “Confidence is key to a market’s recovery. Singapore has put the necessary and appropriate processes and systems in place to safely welcome back leisure and business visitors alike. This is demonstrated via the progressive steps to open up the economy, with the Hong Kong travel bubble as well as the multiple schemes with countries including Australia, Malaysia and China. Singapore’s well-managed supply of hotel rooms – estimated to be less than 2% annually for the next few years – will also be a positive factor to a sustained recovery.”

“Mosque Street in Chinatown has always been bustling and frequented by locals and tourists alike. To capitalize on the high footfall, the successful buyer can explore repositioning and converting the ground floor of the subject property for F&B use to curate an exciting tenant mix of restaurants, wine bars, cafes or bistros, complementing the various F&B establishments along the entire street,” notes Mr Lee.

“For the upper floors, in addition to hotel use, they can also be converted to alternative uses such as serviced apartments, co-working spaces, offices, commercial school or fitness center, subject to approval from authorities. With a leaseback arrangement in place, the buyer will have time to plan how they would like to carry out asset enhancement initiatives to refurbish and reposition the property,” concludes Mr Lee.

The Porcelain Hotel is conveniently located within a short five-minute walk to Chinatown MRT station and is readily accessible via public transportation along New Bridge Road and Cross Street. It connects to other parts of Singapore via the Central Expressway, Marina Coastal Expressway and Ayer Rajah Expressway.

The EOI for The Porcelain Hotel will close on 16 December 2020 at 3pm.

Mr Paul Ho, Chief Mortgage Officer at iCompareLoan, said, “The Porcelain Hotel is in a strategic location but it is unclear if hotel sector’s recovery will make a strong rebound after the circuit breaker period. Since this is the downtime for most hoteliers, they should take this opportunity to review their business strategies and position themselves for the eventual upturn.”

He added, “What they should do is, develop a pricing strategy to make their hotel more attractive once demands returns. Pricing room rates competitively is important as rooms priced lower would mean a slower hotel recovery for the real estate owners and investors.”

Written by Ravi Chandran

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