Sim Lim Square owners eye second collective sale attempt

/ EdgeProp Singapore |
Sim Lim Square sits on a land area of 78,152 sq ft and has a 99-year leasehold tenure from 1983 (Picture: Samuel Isaac Chua/The Edge Singapore)
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SINGAPORE (EDGEPROP) - The owners of IT and electronics mall Sim Lim Square are looking to give the en bloc sale another go. A collective sale committee (CSC) formed at the end of June is now seeking a marketing consultant to help them through the process.
This will be the owners’ second attempt at a collective sale. The first attempt was in 2019 and had an initial proposed price of $1.1 billion, which failed to garner the 80% consent required from owners to proceed, prompting the CSC then to raise the price to $1.25 billion. The tender closed in July 2019 without attracting any bids. In December that same year, Sim Lim Square was relaunched for sale with the same reserve price but did not manage to find a buyer.
Three years on, the new CSC is gunning for a different outcome amid a more buoyant property market coming out of the pandemic. “Now that the market has revived, we are hopeful of a successful en bloc sale this time,” says Rajesh Bafna, a member of and spokesperson for the CSC.
Sim Lim Square was developed by Sim Lim Realty, a subsidiary of Sim Lim Group of Companies. Opened in 1987, the strata-titled development has 492 commercial units spread across the building’s six storeys and two basement levels. The development sits on a land area of 78,152 sq ft which is zoned for commercial use and has a 99-year leasehold tenure from 1983.

Challenging retail environment

Many of the owners at Sim Lim Square have been there for a long time, says Raymond Chua, chairperson of Sim Lim Square’s Management Corporation Strata Title (MCST). “A lot of them also run their own business at their shops,” he adds. Today, there are over 300 owners that collectively own the 492 units at the development.
Chen Lin, Sim Lim Square’s CSC chairperson, says that the development is one of the few standalone IT malls in Singapore. More than 80% of stores there are tech-focused, selling computer, camera and mobile phone-related products and services. “It’s a one-stop shop for all things electronic,” she adds. The other stores include a food court, a hair salon, and a money changer.
Similar to the rest of the retail landscape, the mall was impacted by the pandemic, though Chua points out that sentiment has picked up since safe management measures were eased and borders reopened. Today, occupancy stands at over 80%, but Chua estimates rents are still 10% to 20% below pre-pandemic levels.
Bafna adds that the pandemic accelerated the boom in e-commerce which has also significantly impacted footfall at the mall. “Twenty years ago, if you came to the mall on a weekend and wanted to take the lift, you’d have to spend half an hour waiting for it because there were so many people. Nowadays, it’s not like that,” he laments. Given the more challenging retail environment, Bafna believes that the mall’s unit owners may be more willing to let go of their units through the proposed collective sale. “Many of the older owners are also on the verge of retiring, so it’s likely they might want to cash in for their retirement,” he adds.
From left: Raymond Chua, chairman of Sim Lim Square’s Management Corporation Strata Title; Chen Lin, chairperson of the collective sale committee (CSC); and Rajesh Bafna, spokesperson for the CSC (Picture: Samuel Isaac Chua/The Edge Singapore)

Ample connectivity

Sim Lim Square’s CSC members believe that a major draw of the site is its proximity to MRT stations. It is next to Rochor MRT Station on the Downtown Line, while Bugis, Little India and Bras Basah MRT Stations are also within walking distance, providing additional access to the North-East, East-West and Circle Lines. The site is also connected to major highways including the East Coast Park Expressway, the Central Expressway, the Kallang-Paya Lebar Expressway and the Ayer Rajah Expressway.
Given its connectivity, Bafna believes the site offers strong redevelopment potential. “The future owner could consider redeveloping the site into an integrated development,” he says.
As it is a commercial property, the sale will not be subjected to additional buyer’s stamp duty, with both locals and foreigners eligible to purchase the property. (Find Singapore commercial properties with our commercial directory)
According to Tan Hong Boon, executive director, capital markets, at JLL, commercial sites remain sought after by developers, provided that the price is right. “As many developers are running low on residential landbank, they may also turn to commercial or mixed-use sites,” he adds.

‘The right price’

There have been several successful deals involving large-scale commercial and mixed-use developments this year. The biggest transaction so far was the sale of Tanglin Shopping Centre for $868 million, or $2,769 psf per plot ratio, to the Tanoto family’s Pacific Eagle Real Estate in February.
In the Bugis-Beach Road area, mixed-use development Golden Mile Complex was sold in May for $700 million to a consortium comprising Far East Organization, Perennial Holdings and Sino Land.
The owners of Sim Lim Square are not the only ones eyeing a billion-dollar collective sale. Last September saw the launch of International Plaza, located in Tanjong Pagar, in its first collective sale attempt with a reserve price of $2.7 billion. It was then relaunched in April with the same price, but drew no bids.
In August, the $1.8 billion collective sale attempt for mixed-use development People’s Park Centre in Chinatown closed without any bids.
According to JLL’s Tan, setting the right price is key to any en bloc sale, which starts with owners managing their expectations of the development’s perceived value. “For a collective sale attempt to be successful, owners have to be realistic and set a price that reflects the site’s attributes,” he explains. (See potential condos with en bloc calculator)
For Sim Lim Square, the CSC members say they are open to a lower price, though an exact figure has yet to be decided. “We are internally considering reducing the price, subject to further guidance from the appointed marketing consultant,” says Bafna.

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