Food courts for sale
By Michael Lim
/ The Edge Property |
The corner coffeee shop in Tampines, which has living quarters on the second level, occupies a total area of 3,800 sq ft.
Click here for more listings of shops near Tampines MRT station.
Two food courts — at Midpoint Orchard and in Tampines — have been put up for sale by expressions of interest (EOIs).
The food court at Midpoint Orchard is in the basement of the mall. It has a strata floor area of 2,648 sq ft and space for four food stalls and a drinks stall. The freehold unit has been leased to a master lessee for between $25,000 and $30,000 a month until year-end. The guide price is $11 million ($4,154 psf) to $12 million ($4,531 psf), which is close to valuation. This translates into a gross rental yield of 2.7% to 3%, says Mary Sai, executive director of investment and capital markets at Knight Frank, the marketing agent for both food courts.
The most recent transaction for a unit in the basement of Midpoint Orchard was in October 2014, when a 280 sq ft unit changed hands for $1.35 million ($4,824 psf). A 323 sq ft unit on the second floor was sold for $1.28 million ($3,964 psf) in February 2015, according to URA Realis. “There is still a place for such small food courts on prime Orchard Road,” says Sai.
The food court in Tampines is located at a corner HDB block adjacent to Tampines West Community Club. The coffee shop is situated along Tampines Street 81 and contains 11 stalls. The eating house with living quarters on the second level occupies a total area of 3,800 sq ft, and is currently tenanted at a monthly rental of $50,000 to $55,000, with the lease expiring next April. An outdoor refreshments area of 969 sq ft is also available for lease at a monthly rental of $1,500 payable to HDB. The property has 70 years left on its lease and is on the market with a guide price of $17 million ($4,473 psf) to $18 million ($4,736 psf). This translates into a gross rental yield of 3.5% to 3.7%.
“The eatery is popular with residents and students from the neighbouring St Hilda’s Primary and Secondary schools,” says Sai. On weekends, it also attracts customers from two nearby churches and members of the Soka Buddhist association, she adds.
The most recent transaction in the vicinity was in September 2014, when a 3,000 sq ft HDB shop unit at Block 826 changed hands for $3.5 million ($1,167 psf).
The last time an HDB food court was sold for an eye-popping price was in June last year, when a coffee shop in Bukit Batok changed hands for $31 million. It was bought by the Chang Cheng Group, which runs more than 220 food outlets and 30 coffee shops, including the Chang Cheng Mee Wah chain of coffee shops.
According to Sai, the food courts at Midpoint Orchard and in Tampines belong to the same investment company. The owners want to cash out to reinvest in other businesses. “These two food courts will appeal to both investors and coffee shop owners, owing to their location, high footfall and large catchment areas,” she says.
“To date, we have received good response to these properties,” says Sai. About 60% of the enquirers were investors, and 40% end-users, she adds. The EOIs for both properties close on March 23 at 3pm.
This article appeared in the City & Country of Issue 719 (March 14, 2016) of The Edge Singapore.
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