Portfolio of four retail units in Peninsula Plaza for sale at $50.8 mil

/ EdgeProp Singapore |

November 16, 2023 12:35 PM SGT

Built in 1980, the 30-storey Peninsula Plaza has a retail podium with six strata retail units and 24 strata office units with parking (Photo: Samuel Isaac Chua/EdgeProp Singapore)

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At the 30-storey, mixed-use complex Peninsula Plaza on North Bridge Road, four adjoining strata commercial units in the basement are up for sale collectively as a portfolio by expression of interest (EOI). These units have a total strata area of 16,038 sq ft and a guide price of $50.8 million or $3,167 psf.

Six tenants occupy the space: three KTV bars and three Myanmar eateries. Based on the prevailing rents and guide price, the new buyer will enjoy an entry yield of 3.6%, estimates Sammi Lim, founder and director of Brilliance Capital, the exclusive marketing agent for the portfolio.

The 16,038 sq ft retail space in the basement of Peninsula Plaza is leased to six tenants: three KTV bars and three Myanmar eateries (Photo: Samuel Isaac Chua/EdgeProp)

URA approval has been obtained for the units to be used as a food court, restaurant, karaoke lounge or nightclub. The units are ideal for such uses as they are next to an escalator and stairs accessible from the street. “Their operating hours are therefore not restricted to the normal operating hours of a mall,” says Lim.

The units are also accessible via an underground pedestrian link from Peninsula Shopping Centre across the road. Peninsula Shopping Centre was built in 1971. Peninsula Plaza, a 999-year leasehold commercial building with a six-storey retail podium and 24-storey office block with parking facilities, was built a decade later in 1980.

Funan is an integrated development with six storeys of retail, two office blocks and 429-room Lyf at Funan co-living serviced residence. It’s a redevelopment of the former Funan DigitaLife Mall and opened in 2019 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Neighbourhood renewal

Over the past decade, the neighbourhood around Peninsula Plaza has evolved. CapitaLand redeveloped Funan and opened it in June 2019 as an integrated development with a six-storey, 269,806 sq ft mall, two blocks of offices and the 429-room Lyf Funan Singapore co-living serviced residence.

On the other side of Peninsula Plaza is another revamped retail mall, Capitol Singapore, a two-storey mall with four basement levels. It opened in 2015 as Capitol Piazza and was repositioned in 2019. Capitol Singapore, by Perennial Holdings, is an integrated development with the conserved Capitol Theatre, the newly built 39-unit luxury residence Eden Residences Capitol and the 155-room The Capitol Kempinski Hotel Singapore (conserved former Stamford House).

Capitol Singapore is connected in the basement to City Hall MRT Interchange Station (for the North-South and East-West Lines). Since December 2021, the underground pedestrian link also connects to neighbouring buildings such as Funan and The Adelphi.

Hence, Peninsula Plaza is well situated, given its proximity to neighbouring buildings like Capitol Singapore, Funan, The Adelphi, and accessibility to City Hall MRT Interchange Station, notes Lim. Landmarks nearby include St Andrew’s Cathedral, the National Gallery and the Supreme Court.

Myanmar restaurants in the basement of Peninsula Plaza - there is an underground pedestrian link connecting Peninsula Plaza and Peninsula Shopping Centre across the road (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Little Myanmar’

Peninsula Plaza has also changed over the past decade, morphing into “Little Myanmar”, especially on Sundays. “With more people from Myanmar coming to Singapore, there are a lot of new shops and F&B outlets at Peninsula Plaza catering to their needs,” says Lim. “Whenever a unit becomes available, it’s quickly taken up.”

This is not the first time that the portfolio of units in the basement of Peninsula Plaza has been put up for sale. In July last year, it was launched for sale by EOI at a guide price of $60 million. While there was interest from various parties, the deal fell through.

The owner of the four units in the basement of Peninsula Plaza is “realistic” and in tune with what is happening on the ground, notes Lim. They are therefore willing to adjust the selling price to $50.8 million, taking into consideration the softer market conditions, she adds.

A property title search shows that the four units in Peninsula Plaza belong to Kosma Holdings, which has held them for 30 years. It is the holding company of an investment firm that used to be involved in F&B. While the owner has received offers to purchase the individual units over the years, they are only interested in selling all four units collectively as a portfolio, says Lim.

“Such sizeable adjoining strata spaces with separate access can be considered a valuable investment due to the option of extending the operating hours and having multiple tenants to diversify business risk,” says Lim.

The units in the basement are accessible from the street via the staircase and escalators (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Long-term en bloc potential

According to Lim, the value of such strata spaces is likely to appreciate over time. “It is especially so for 999-year leasehold properties like Peninsula Plaza, which is equivalent to a freehold tenure,” she adds.

Lim points out that those who intend to hold the property over the long term will also benefit from any potential en bloc sale. For instance, in late September, Far East Shopping Centre, a freehold, strata-titled commercial development built in the 1970s on prime Orchard Road, was sold en bloc for $908 million ($3,350 psf per plot ratio) to Chinese tycoon Du Shuanghua’s Glory Property, a unit of Singapore-registered mining and resources company, Bright Ruby Resources.

On Nov 1, Malaysian real estate magnate Lee Yeow Seng, CEO and major shareholder of Bursa Malaysia-listed IOI Properties Group, acquired the leasehold Shenton House on Shenton Way for $538 million via a private entity, Shenton 101. It is also a commercial development with a mix of strata-titled retail and office space.

Tenants from these commercial buildings that have been sold en bloc are now looking for alternative premises. For instance, Brilliance Capital recently brokered an office rental deal at Peninsula Plaza. It was for a tenant that had moved out of an office space at Far East Shopping Centre.

Peninsula Shopping Centre is located across the road from Pensinula Plaza and was built in 1971 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Investors, business-occupiers

Lim believes the units at Peninsula Plaza will attract investors and business owners who wish to occupy the premises. The units come with four individual strata titles. Hence, the buyer can operate some units and rent out the remainder for rental income or sell them individually.

Based on caveats lodged, there have been seven transactions at Peninsula Plaza. Only two are strata retail units; the rest are strata office units. The latest transaction of a retail unit was for a 344 sq ft unit on the second floor that changed hands for $1.18 million ($3,426 psf) in early October. Another transaction was at the start of the year on Jan 5, and it was for two retail units on the third level with a total strata area of 646 sq ft. They fetched a total of $2.42 million ($3,747 psf).

Besides local buyers, Lim reckons interest in Peninsula Plaza could come from overseas buyers too, such as those from China, Hong Kong and Myanmar.

As the property is zoned “Commercial”, buyers are not subjected to seller’s stamp duty or additional buyer’s stamp duty. The EOI exercise will close on Jan 18, 2024.

Lim: Such sizeable adjoining strata spaces with separate access can be considered a valuable investment due to the option of extending the operating hours, having multiple tenants to diversify business risk and a 999-year lease (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Check out the latest listings for Peninsula Plaza properties

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