Four-storey amalgamated shophouses at Duxton Road on sale for $55 mil
By Timothy Tay
/ EdgeProp Singapore |
The three amalgamated shophouses at the corner of Duxton Road is on the market for $55 million (Photo: Cushman & Wakefield)
SINGAPORE (EDGEPROP) - Three amalgamated shophouses on Duxton Road are on the market for $55 million. Located on a corner plot, the four-and-a-half-storey conservation shophouses sit on a 4,160 sq ft site zoned “commercial” under the 2019 Master Plan.
Located in Tanjong Pagar, the conservation shophouses have a 99-year lease from 1989. Hence, they have 65 years remaining on the lease. Cushman & Wakefield has been appointed the marketing agent for the shophouses, which will be sold by an expression of interest exercise that will close on July 20.
The shophouses underwent a comprehensive renovation in 2013 that saw the addition of new mechanical and electrical fixtures, the installation of an internal lift and new specifications. Over the past year, the exterior has been repainted. The lift has also been regularly maintained and serviced.
To date, more than $2.5 million in cumulative capital expenditure has been spent on renovating and maintaining the property. The last structural inspection was conducted in April this year.
After the amalgamation, the shophouses have a combined gross floor area (GFA) of 15,423 sq ft. The first level has a floorplate of 3,707 sq ft. The second to fourth floors have identical floorplates of 3,044 sq ft. The attic has a floor area of 1,731 sq ft.
The first level has been leased to a spin studio and a retail shop. The second and third floors have been leased to long-term office tenants. The fourth level and mezzanine has been leased to a gym.
The three shophouses are held by a single owner, which makes the transaction process more straightforward, says Shaun Poh, executive director of capital markets at Cushman & Wakefield.
Duxton Road: popular F&B enclave
The shophouses are located near three MRT stations: the Tanjong Pagar MRT station on the East-West Line, the Maxwell MRT station on the Thomson-East Coast Line and the Outram MRT interchange station (for the East-West, North-East and Thomson-East Coast Lines).
The Duxton Road neighbourhood is characterised by its vibrant F&B and cultural scene and the area is also a popular locale for tourists and business travellers given its proximity to the CBD, civic district, transport networks, and high-end F&B establishments.
There are several four- and five-star hotels such as Amara Singapore, Carlton City, Oasia Hotel Downtown, Sofitel Singapore City Centre, Maxwell Reserve and Duxton Reserve. The launch of the first Mondrian-branded hotel in Southeast Asia at 16A Duxton Hill will further add to the locale’s hospitality offerings and desirability.
The Duxton Road neighbourhood is a popular and vibrant F&B hotspot. (Picture: Samuel Isaac Chua/The Edge Singapore)
According to Cushman & Wakefield’s Poh, the shophouses can also be repositioned for F&B use, subject to approval from URA. Rents are generally higher for F&B compared to offices, he adds.
As the shophouses occupy a corner lot on Duxton Road, the south-facing wall of the shophouse is visible from Craig Road and Duxton Road. “This is an opportunity to turn it into a striking feature wall with street art or advertising,” says Poh. “It is an opportunity to create a statement piece for the neighbourhood or a potential advertising revenue stream.”
He adds: “It is rare to find a corner shophouse in the Duxton Road/Tanjong Pagar area that is prominently located and well maintained.” He adds that there are fewer than 20 such corner shophouses in the area.
A 140 sqm (1,507 sq ft) remnant site is next to the corner shophouses. Poh says the new owner could lease or buy the state land from the Singapore Land Authority. He adds that the plot can be used for events and other place-making activities that will enhance the asset’s value.
Opportunistic buyers fill the market
“There is a growing trend among F&B operators in the Duxton Road area to launch pop-ups to make better use of their space during the day. This is in line with the character and vibrant F&B scene of the area,” adds Poh.
Even though opportunistic buyers and investors have ventured into the shophouse market over the past two years, the number of transactions has significantly tapered off in recent months, says Poh.
“The most desirable shophouses are in the CBD, Duxton and Chinatown area in Districts 1 and 2,” says Poh. “Most of the available assets still on the market are generally priced higher than most buyers’ expectations.”
According to Poh, the handful of shophouses transacted in recent months have a strong income-generating capacity through long-term leases or were snapped up by high-net-worth owner-occupiers.
Cushman & Wakefield’s research shows at least four shophouse transactions in the Duxton Road-Duxton Hill neighbourhood this year.
The most recent transaction was for 36 Duxton Hill, a three-storey 99-year leasehold shophouse that changed hands for $14.3 million ($3,682 psf) in April. That month also saw the sale of 50 Tanjong Pagar Road, a two-storey, 99-year leasehold shophouse, for $8.4 million ($3,681 psf), according to a caveat on April 13.
Two other sales took place in February: 16 Duxton Road, a two-story shophouse that changed hands for $8.6 million ($3,220 psf) and 45 Tras Street, a three-storey shophouse that was sold for $11.9 million ($3,071 psf).
Nevertheless, there has been a resurgence in demand for shophouses among local high-net-worth individuals as well as wealthy foreigners who are keen to capitalise on the resiliency and stability of the Singapore property market, says Poh.
“Most of these incoming foreign buyers and investors prefer relatively low-risk assets in well-known areas like Chinatown and Tanjong Pagar,” he says, adding that there is a growing preference to add shophouses as trophy assets in their portfolio.
Shophouses along Duxton Road and Duxton Hill house many popular F&B establishments, private clubs, and offices. (Picture: C&W)
The latest property cooling measures imposed in April specifically targeted luxury residential investment demand from locals and foreigners. However, he did not see a significant wave of investors switching from luxury residences to commercial shophouses. (Find Singapore commercial properties with our commercial directory)
“Unless some of these investors were already eyeing some commercial properties to add to their portfolio this year, most buyers would not switch tack overnight from residential to commercial,” says Poh.
Recycling capital
The amalgamated shophouses that Cushman & Wakefield is marketing have received several unsolicited offers over the past few years. Together with the strong demand for such assets and the lull in transaction volume, the owner feels this is the right time to realise the value of the property after raking in strong rental income over the past 10 years, says Poh.
The balance of 65 years on the lease is still relatively long, and the new owner can still enjoy capital appreciation, according to Poh.
He reckons that most owners need not worry about topping up the lease to a fresh 99 years until it has run down to just 30 to 40 years.
He expects to see shophouse transaction volume picking up in the coming quarters as more sellers re-enter the market with “realistic asking prices”. However, they will still be able to realise capital gains from their acquisitions a few years ago, he adds.
Check out the latest listings near Duxton Road, Duxton Hill, Tras Street, Tanjong Pagar MRT station, Maxwell MRT station, Outram MRT interchange station
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