Collecting shophouses for the next generation

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/ EdgeProp
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November 3, 2017 4:00 PM SGT
Davison: In the early 1950s, there were no trees here and you had a panoramic view of the whole downtown (Credit: EdgeProp SG)
Tucked away amid the supersized Good Class Bungalows of Ridout Road is a little clearing with two blocks of low-rise flats fronting a lawn. These blocks of flats were built by the Singapore Improvement Trust to house the young British professional architects and others who worked for SIT, recounts Julian Davison, anthropologist, architectural historian and former Lee Kong Chian Research Fellow.
SIT, the predecessor of HDB, was set up in 1927 by the British colonial government in Singapore to solve overcrowding in shophouses and squatter settlements. This led to the advent of affordable public housing for the mainstream population in Singapore.
Incidentally, Davison is a resident of one of these flats on Ridout Road, which are now owned by the Singapore Land Authority (SLA) and available only for lease. It holds nostalgic memories for him, as his father, who worked for SIT as a young architect between 1952 and 1954, had lived in one of these flats too.
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“In the early 1950s, there were no trees here and you had a panoramic view of the whole downtown. The guys who lived in these flats could walk to Queenstown [Singapore’s first satellite new town], which was being built then,” says Davison.
“Otherwise, Swettenham-Ridout Road was a rich area with black-and- white bungalows in those days, and not for junior people working in SIT like my father then.”
His father, Richard Davison, went on to become a founding partner of architectural practice Raglan Square & Partners in 1956. The international architectural firm is now known as RSP Architects Engineers & Planners.
Did Davison ever aspire to follow in his father’s footsteps and become an architect? “I’ve always loved architecture and buildings, and my father knew that. But he resolutely didn’t push me, and he never said, ‘Why don’t you become an architect?’
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But he did say to me that, if I liked architecture, to keep it as a hobby. As an architect, he said he was a ‘95% businessman’ who went around shaking hands and was in meetings the whole time. It was the young architects who had the pleasure of designing the buildings.”
Davison pursued anthropology and is a recognised architectural historian. He is also author of books such as Singapore Shophouse and Black & White — The Singapore House 1898-1941, based on the architecture of the bungalows built during the colonial era. He is completing a history of Singapore’s oldest architectural practice, Swan & Maclaren, whose origins date back to the late 1880s, with the book scheduled to be published in the last quarter of 2017.
The next book in the pipeline is the history of Singapore told through its architecture. It is not just about the buildings, but who built them and why they were built then. “If you look at the way the city grows, it’s always in response to some major historical event,” says Davison, who hopes to complete the book by 2019, which coincides with the 200th anniversary of the founding of Singapore by Sir Stamford Raffles.
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View of the CBD and Chinatown shophouses in Singapore, which are sought after by the foreign rich (Credit: EdgeProp SG)
‘Sea of shophouses’
Davison says “Singapore was a sea of shophouses” in the 1950s. Even in the early 1900s, the representation of Singapore was through its shophouses. “Given the ubiquity of the shophouses, it’s not surprising that it has become a Singapore icon.”
The shophouses were gazetted by URA for conservation in areas such as Boat Quay, Chinatown and Little India. The shopshophouses in Chinatown, particularly
in the vicinity of the CBD area such as Amoy Street, Telok Ayer, Ann Siang Hill and Duxton Hill, have also gained the attention of overseas investors — hedge funds, private-equity firms and family offices — over the past 12 years, notes Simon Monteiro, associate director of heritage buildings at Savills (Singapore). “It’s about wealth preservation,” he says. “Given the global market uncertainty elsewhere, Singapore looks attractive by comparison. They want to put their wealth in assets that will hold their value and they can pass on to the next generation.”
Prices in these areas have soared, as there are restrictions in buying such assets, he adds. Of the 8,900 conservation shophouses in Singapore, only 3,000 to 3,500 units are zoned for full commercial use. Foreigners are allowed to buy only such shophouses, notes Monteiro. “Foreign investors and corporate entities are not allowed to buy shophouses zoned for commercial use on the first level and residential use on the upper floors, or those that are zoned for residential use.”
Monteiro: This group of ultra-rich foreign investors are interested in conservation shophouses because to them, it’s like… buying a piece of history (Credit: EdgeProp SG)
More than just a building
Monteiro has been a specialist in marketing conservation shophouses and heritage buildings for more than 20 years. In that time, he has transacted more than $1 billion worth of shophouses. He still remembers his first deal. “It was a conservation shophouse unit at Spottiswoode Park in 1994, and it was sold for $1.6 million.”
In 2011, Monteiro sold a pair of adjoining shophouses on Neil Road in Bukit Pasoh to Luca Padulli for $17.5 million. Scion of a prominent Milan family and reportedly one of Britain’s richest, Padulli is known to be very private, but is famous for his art collection and real estate investments. He is also a co-founder of Camomile hedge fund and asset management firm.
Padulli had stated that he would finalise the purchase of the shophouses only if the provenance of the buildings on Neil Road were determined and documented by a historian, says Monteiro. That was when he engaged Davison’s service to establish the historical origins of the building. According to Davison, the building was once a biscuit factory owned by a once-upon-a-time ‘Biscuit King’.
Once the provenance of the buildings on Neil Road was established and the deal was completed, Monteiro engaged Tellus Architects to renovate the buildings before it was tenanted to Goethe-Institut Singapore, the cultural institute of the Federal Republic of Germany, which moved in in March 2014.
The trailblazers that led the way for foreign wealth into Singapore’s conservation shophouses included Ed Peter, who bought three shophouses on Duxton Hill in the Tanjong Pagar conservation area 12 years ago. Monteiro had represented him in those purchases. Peter is chairman of Duxton Asset Management, which he co-founded in 2009. Before that, he was head of Deutsche Asset Management in Asia-Pacific, the Middle East and Africa. “Since then, you could see the tide of ultra-rich foreigners snapping up shophouses,” says Monteiro.
Soaring prices
As foreigners could buy only shophouses with commercial zoning, Monteiro has seen prices of these shophouses soar over the past 12 years. In 2005, 99-year leasehold shophouses at Duxton Hill ranged from $1.5 million to $1.7 million each. In 2013, the same shophouses were sold for $7 million to $7.2 million apiece, according to URA Realis.
Today, prices of 99-year leasehold two-storey conservation shophouses in the CBD range from $2,000 to $2,500 psf; those that have a 999-year leasehold or freehold tenure are commanding prices of $2,800 to $3,000 psf. Prices of highly sought after corner units are at least $200 to $300 psf higher, estimates Monteiro.
“This group of ultra-rich foreign investors are interested in conservation shophouses because, to them, it’s like collecting art — buying a piece of history — and they appreciate the architecture and the story behind it,” says Monteiro.
As such, he is collaborating with Davison who — given his knowledge of shophouses in Singapore and his wealth of research — will be instrumental in helping to establish the provenance of these heritage buildings. “With this record of ownership, they can pass it along with the asset to the next generation or the next buyer,” says Monteiro. “It’s like the provenance for a collector of an expensive piece of art or antique.”
Davison agrees. “The second and third generations of owners will appreciate the stories behind it, the characters that were once associated with the property.”