Aspial Corp-Fragrance Group JV to sell remaining 34 strata commercial units at City Gate

By
/ EdgeProp Singapore
|
April 1, 2022 8:00 AM SGT
City Gate mall has its own drop-off point and carpark, separate from that of City Gate Residences (Photo: Samuel Isaac Chua/EdgeProp Singapore)
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SINGAPORE (EDGEPROP) - Over the past two years, a wide mix of businesses have sprung up at City Gate, a three-storey mall with 188 strata-titled shops on Beach Road. Many of the businesses that opened there are start-ups by entrepreneurs. And it’s a diverse mix.
In the basement level is Maturo, which specialises in dry-aged beef. Its proprietor, who wants to be known only as Victor, opened the shop at City Gate last year. “We started ageing our own meat because we couldn’t find any in Singapore,” he says. “We wanted to make dry-aged beef accessible to everyone.” He carries a wide variety — from $12 per 100g for Grain-Fed Angus Dry Aged for 200 days, to USDA Super-Prime Dry Aged for 30 to 60 days at $21.50 per 100g.
His customers have mainly been walk-ins, although the company does home deliveries too. “People can call us, and they can have a steak at home within two to three hours,” says Victor, a Singapore permanent resident (PR) who was born in Ukraine but grew up in Israel before moving here 12 years ago.
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VICTOR OWNER MATURO - EDGEPROP SINGAPORE
Victor: We started ageing our own meat because we couldn’t find any in Singapore. We wanted to make dry aged beef accessible to everyone (Photo: Samuel Isaac Chua/EdgeProp Singapore)
A few doors down is the takeaway kiosk of Dumplings.Ru, which specialises in authentic Russian-Ukrainian cuisine and is famous for its dumplings. The business was started two years ago by Ukraine-born Vadim Zubovsky and his wife Alena, both Russian nationals who moved to Singapore in 2004 and are both Singapore PRs.
On the first level, Doris’s Devilishly Delicious Curry refers to itself as “Singapore’s flagship ‘Devil Curry’ restaurant”. On the second level is Lobster Air, a travel-themed restaurant which features “Business Class” and “First Class” menus. It was founded as an enterprise to provide job opportunities for airline personnel — from pilots and flight attendants to ground staff — who have either been laid off or suffered pay cuts.
Butterknife Folk — Singapore-born specialists in artisanal gelatos with a wide range of flavours such as Ang Moh Carrot Cake, Chendol and Cotton Candy Skies — has a store in Funan, while its office is in a basement unit at City Gate.
“The retail scene has evolved over the past three years,” says Sammi Lim, founder and executive director of Brilliance Capital. “Contrary to what people think about strata-titled malls, they can be well-managed and have a good tenant mix.”
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second level of the mall at City Gate - EDGEPROP SINGAPORE
Escalator from the carpark on the third level to the second level of the mall at City Gate (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Rent to purchase’

The mall is part of a mixed-use development that includes 311 condominium units in a 30-storey tower at City Gate Residences. Developed by a 50:50 joint venture between Aspial Corp’s property arm World Class Land and Fragrance Group, City Gate obtained its temporary occupation permit (TOP) in December 2018. The mall has its own drop-off point and its own carpark, separate from the entrance and carpark for the residential tower.
Of the 188 commercial units, 29 are zoned for restaurant use, which means they are fitted with an exhaust fan and grease trap. Another unit has been designated for use as a food court. A 3,735 sq ft unit on the second level was allocated for use as a supermarket. However, a bridal services company, Love Nest, now occupies the supermarket space.
The developer still owns 34 units within the mall, including the supermarket space. It is now looking to sell the units either individually or as an entire portfolio. The 34 units have sizes ranging from 441 to 646 sq ft, excluding the supermarket unit of 3,735 sq ft. However, there are eight consecutive units on the second floor that can be amalgamated to create a larger space of 4,585 sq ft, says Lim of Brilliance Capital, the appointed marketing agency.
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First level of the City Gate mall - EDGEPROP SINGAPORE
First level of the City Gate mall (Photo: Samuel Isaac Chua/EdgeProp Singapore)
There are also four vacant units within the 34-unit portfolio. These are offered for sale under a “rent to purchase” scheme, which basically allows tenants to rent first, and at any point during the two- or three-year lease period, they can choose to purchase the unit. The final purchase price will be deducted from the rental that they have already paid to-date. However, the purchase price for such “rent to purchase” units will be slightly higher than for the other units that are tenanted, adds Lim.
“Many of the tenants we have spoken to are drawn to such a scheme, especially when they are unsure of their business prospects in the initial months,” says Lim. “However, after a 12- to 18-month period, when they are more established, some may prefer to buy the unit that they are occupying. The ‘rent to purchase’ scheme allows them to do so.”
All the retail units are regular in size, have 4.6m floor-to-ceiling height, and are fitted with waterpoint and floor traps. The units can therefore be used for food kiosks, gym, manicure/pedicure salons and even medical clinics, says Lim.
Tony Tan and his wife Sylvia Koh - EDGEPROP SINGAPORE
Tony Tan and his wife Sylvia Koh, the proprietors of Natural Elements Spa on the second level and Palette Hair Salon on the first level of City Gate (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Expanding within City Gate

One businessman who has expanded within City Gate is Singaporean Tony Tan, whose wife Sylvia Koh is the proprietor of Natural Elements. “I’m actually in the renovation trade,” says Tan. “But I’m helping my wife with her business.”
Despite the pandemic, the couple decided to expand as they felt that the spa needed more rooms. Tan wanted to bring in foot reflexology too. Hence, they took up the adjacent unit last year, and it is currently being renovated.
Tan also took up two units on the first level of City Gate, and opened Palette Hair Salon in September last year. “Hopefully, with things normalising, travel resuming and nightlife returning, business will improve,” he says.
Palette Hair Salon - EDGEPROP SINGAPORE
The Palette Hair Salon which occupies two units with a total floor area of 1,000 sq ft on the first level of the mall (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The four units taken up by Tan have a combined total of 2,100 sq ft. The average monthly rental rate from the landlord, World Class Land, is about $6.50 psf per month, which he says “is very reasonable”.
Rental rates for the first-floor units generally range from “the high single digits to $10 psf per month”, while rental rates for the basement and second level are in the $5 psf to $7 psf range, estimates Brilliance Capital’s Lim.

‘Priced to sell’

The latest transaction of a commercial unit at City Gate was for a 452 sq ft unit in the basement level that changed hands for $968,000 ($2,141 psf) in February. The unit was purchased at launch for close to $1.48 million ($3,270 psf) in August 2014, based on caveats lodged.
City Gate Residences - EDGEPROP SINGAPORE
The 311-unit City Gate Residences is fully sold and completed in Dec 2018 (Photo: Samuel Isaac Chua/EdgeProp Singapore)
When City Gate was first launched in late July 2014, the strata commercial units were sold at prices from $2,898 psf or $1.279 million for a 441 sq ft unit in the basement level; to a high of $6,300 psf or $2.238 million for a 355 sq ft unit on the first level, according to caveats lodged with URA Realis. Units sold in the first month of launch averaged $4,084 psf.
The remaining 34 units for sale by the developer are priced in the range of $2,800 to $3,800 psf, or starting from $1.3 million for a 441 sq ft unit. “They are priced to sell,” notes Lim.
She sees demand for the individual units coming from both businesses which are looking to occupy the units themselves and investors looking for recurring rental income. Enquiries have come from people looking to set up cafés, bakeries, florists, fashion labels and e-sports start-ups that want to establish a physical presence, as well as those in the education and healthcare sectors, she observes.
Linkway to the Nicoll Highway MRT station - EDGEPROP SINGAPORE
Linkway to the Nicoll Highway MRT station from the second level of City Gate (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Sieow Teak Hwa, managing director of the eponymous Teakhwa Real Estate, a specialist in en bloc deals, has taken up a unit in the basement of City Gate and has been there for the past two years. “I moved here because I like the location: It’s just a three-minute walk to the Nicoll Highway MRT Station, and there are a lot of amenities and eateries here,” he says. (See potential condos with en bloc calculator)
It’s not just real estate agencies which want to have an office in a mixed-use environment with both office and retail units, but interior designers too. “This is because there is foot traffic and greater visibility,” says Lim.
The units at City Gate have a 99-year lease starting from 2014, hence they have a balance of 91 years. The project is a redevelopment of the former Keypoint, which was jointly purchased by Aspial and Fragrance for $360 million in 2011.
City Gate - EDGEPROP SINGAPORE
City Gate (second tower from the left), is located within the Downtown Core, and is the newest mixed-use development in the Beach Road-Jalan Sultan neighbourhood (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Rejuvenation in the Ophir-Rochor Corridor

Located at the junction of Beach Road and Jalan Sultan, City Gate is located next to the Kampong Glam Park and has a covered overhead bridge on the second floor that leads directly to the Nicoll Highway MRT Station on the Circle Line.
Having been completed in late 2018, City Gate is the newest development in its vicinity. Its neighbour just across Minton Road is mixed-use development Sultan Plaza at Jalan Sultan. The development was built in the 1970s, and made a collective sale attempt last December at a reserve price of $360 million. It has a 99-year lease from 1978.
Next door to Sultan Plaza is Textile Centre, another 99-year leasehold, mixed-use development with a lease from 1970. Owners there are also attempting a collective sale. Further down along Beach Road is Golden Mile Complex, which was gazetted for conservation and put up for collective sale for $800 million. The tender closed at the end of February. An offer of $700 million was reported to have been made by a consortium led by Far East Organization and Perennial Holdings. It is subject to consent by 80% of the owners of Golden Mile Complex.
shophouses at Haji Lane - EDGEPROP SINGAPORE
The shophouses at Haji Lane located near City Gate (Photo: EdgeProp Singapore)
City Gate is located within the Beach Road and Ophir-Rochor Corridor, which the URA is rejuvenating. New mixed-use developments that were completed there in recent years include Duo and South Beach, with upcoming integrated developments such as Guoco Midtown and redevelopment of the former Shaw Towers.
Nearby is also the conservation area of Kampong Glam with the colourful shophouses at Haji Lane and Arab Street. Located opposite City Gate is Hotel Clover along Jalan Sultan. In early March, the hotel, which sits within 10 conservation shophouses with a 99-year lease from 2008, was sold to a joint venture between Hong Kong-based owner-operator of rental accommodation Weave and Singapore-listed property developer SLB Development. The purchase price was $74.8 million, and Weave intends to reposition the asset.
Meanwhile, two adjacent 999-year leasehold shophouses along Haji Lane changed hands for $13.5 million last month. “What people like about the neighbourhood is the charm of the old and the new,” says Lim. “With ongoing rejuvenation in the area, they are also betting on future capital appreciation and rental upside.”
CITY GATE LAND LENS - EDGEPROP SINGAPORE
Source: EdgeProp Land Lens

Portfolio sale draws family offices

The residential property cooling measures in December had led some investors to switch their focus to commercial real estate as an alternative to residential property. Hence, there has been a spike in interest in both strata retail and office units in recent months, notes Lim.
Since the clampdown on strata subdivision of new commercial developments in the prime CBD and Orchard Road areas, interest in such units has picked up further, according to Lim. “Some owners of such strata commercial units, especially those in the Core Central Region, are suddenly realising the value of these properties, given the limited supply,” she adds. (Find Singapore commercial properties with our commercial directory)
Seeing renewed demand for such spaces, Aspial and Fragrance are also open to selling all 34 units at City Gate in a bulk deal. With a total strata area of 21,420 sq ft, the portfolio has a price tag of $75 million or an average of $3,501 psf, says Lim. Interest in purchasing the units in bulk has come from ultra-high- net-worth investors and family offices, both local and overseas, says Lim. This is because commercial property is not subjected to additional buyer’s and seller’s stamp duties, she points out.
Brilliance Capital SAMMI LIM - EDGEPROP SINGAPORE
Brilliance Capital’s Lim: What people like about the neighbourhood is the charm of the old and the new. With ongoing rejuvenation, they are also betting on future capital appreciation and rental upside (Credit: Brilliance Capital)

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