Two freehold adjoining properties at South Bridge Road for sale

The two freehold adjoining properties are located at 70 & 72 South Bridge Road

two freehold adjoining properties
image: Colliers International

Colliers International announced that they will put two adjoining freehold properties up for sale via an Expression of Interest (EOI) on Tuesday, 11 May 2021.

The two adjoining freehold properties comes with an indicative price of S$45 million.

The sale price of the pair of adjoining freehold six-storey commercial buildings translates to approximately S$3,550 psf on existing gross floor area across both buildings.

The combined site area is 2,325 sq ft with a total gross floor area of approximately 12,700 sq ft. Under the Urban Redevelopment Authority’s Master Plan 2019, the site of the two adjoining freehold properties is zoned Commercial with a Gross Plot Ratio 4.2.

As the two adjoining freehold properties sit on a site zoned for “Commercial” use, foreigners are eligible to purchase the subject property. There is also no Additional Buyer’s Stamp Duty (ABSD) or Seller’s Stamp Duty (SSD) imposed on the property transaction.

These rare freehold adjoining buildings sit on a corner plot with prominent dual road frontages on Hong Kong Street and South Bridge Road and are strategically located on the fringe of CBD. The buildings are one of the taller ones in the area, and the higher floors will offer views of the Singapore River.

Mr Steven Tan, Senior Director of Investment Services, commented, commented, “The asset is located along a stretch of lively F&B and active lifestyle concepts with relatively heavy foot traffic. It also offers investors seeking an investment property with real value rental opportunities. Such investors can reconfigure the asset through an asset enhancement initiative for further maximisation of leasable space. For self-occupiers, the asset has wide frontages allowing for naming and signage rights. To this end, this asset can cater to a myriad of a different profile of investors.”

The two adjoining freehold properties are well-connected through Clarke Quay MRT Station (North-East Line) and Raffles Place MRT Interchange (East-West and North-South Lines), with both stations being less than a 10-minute walk.

Mr Tan added that “This investment is of bite-size quantum in today’s buoyant commercial market. As the current commercial market remains fluid and positive, the Seller is looking to recycle capital as they refocus on enhancing their other business goals and directions. They are open to sale and leaseback subject to further negotiations.”

The EOI for 70 & 72 South Bridge Road will close on Wednesday, 16 June 2021, at 3 pm.

Since 8 December 2011, foreigners who want to acquire a residential property here has to pay an additiona1 buyer’s stamp duty (ABSD) on the higher of the total purchase price or market valuation. The ABSD rate was adjusted on 6 July 2018.

source: IRAS

But ABSD is is payable only on the acquisition of residential properties, and based on the higher of the consideration or market value. The ABSD rate applicable depends on the profile of the buyer. For acquisitions made jointly by two or more parties of different profiles, the ABSD rate applicable will be based on the profile with the highest ABSD rate on the entire property value acquired.

All entities will be subject to the new ABSD rate of 25%. In addition, housing developers are subject to an additional non-remittable ABSD rate of 5% upon stamping, i.e. aggregate ABSD rate of 30%.

ABSD is however not applicable to commercial properties and so these rose in popularity following the cooling measures imposed on the residential segment in 2011, 2013 and 2018.

Unlike residential property, commercial property is typically not an option considered by most Singaporeans unless you are an investor or business owner. Thus, the pool of local buyers is smaller. Further, buying a commercial property is more complex and varied. It is also less speculative compared with residential segment.

The maximum loan tenure for commercial properties will depend on remaining lease and typically stands at 30 years and generally they would be lower if the lease of the property becomes less.

To buy a commercial or industrial property under personal name, total debt servicing TDSR applies on the individual income.

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.

Written by Ravi Chandran

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