Why investors may want to park $42 mil at People’s Park Complex

/ EdgeProp Singapore
June 25, 2021 7:00 AM SGT
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SINGAPORE (EDGEPROP) - The 31-storey People’s Park Complex is a landmark in Chinatown. Fronting Eu Tong Sen Street, it was built on the first site sold under the government land sales programme in 1967 by the former Urban Renewal Department of the Housing Development Board. (See also news about: People’s Park Complex carpark for sale at $42 mil)
The main tower block of 25 storeys at People’s Park Complex contains 291 apartments and was completed in 1972. It sits on top of a carpark and retail podium. The sixth and topmost floor of the podium is the open-air rooftop carpark which also comes with a sole F&B unit of 2,809 sq ft. The other strata-titled commercial units, mainly retail shops, are across the first to fifth floors of the retail and carpark podium.
Over the years, ownership of the strata-titled residential, office and retail units in the building, which has 46 years remaining on its 99-year lease from 1968, has changed hands. Tenants have changed too. Within the retail mall today are at least three Chinese supermarkets, the latest being Si Jia Ke, with a pick-and-go concept. The other is a 24-hour Chinese commodity supermarket called Scarlett Supermarket which sells snacks, dried goods and groceries from China. And then there is First Emporium & Supermarket.
Chinese supermarkets and grocery stores at People's Park Complex - EDGEPROP SINGAPORE
There are at least three Chinese supermarkets and grocery stores at People's Park Complex (Photo: Brilliance Capital)
Launched for sale recently is the multi-storey carpark at People’s Park Complex. The carpark spans four floors, from the third to sixth levels, and has a total of 648 parking spots for cars and another 56 for motorcycles. With a strata area of 182,340 sq ft, the carpark accounts for 26% of the total strata area in the development. It includes the 2,809 sq ft F&B unit on the roof-top.
The carpark has a guide price of $42 million, which translates to $208 psf for the carpark and $1,673 psf for the F&B unit. If the F&B unit valued at $4.7 million was excluded, the price per parking space would work out to about $57,000, estimates Sammi Lim, founder and executive director of Brilliance Capital, the exclusive marketing agent for the carpark.

Alternative asset class

Carparks have emerged as an attractive alternative asset class for real estate investors. In Singapore, parking spots are not traded the way they are in Hong Kong, where a record price of HK$10 million ($1.73 million) per spot was set in May this year. It was for the purchase of parking spots at super luxury development, Mount Nicholson at The Peak, where the houses have smashed records too.
Carparks have emerged as an attractive alternative asset class for real estate investors (Photo: Brilliance Capital)
However, three carparks in Singapore were sold between December and early this year. The most expensive parking spot is at Holland Road Shopping Centre, where a Hong Kong investor paid $17.33 million for the strata-titled, freehold basement carpark last December. The carpark has only 47 parking spaces and the price translated to $368,723 per spot (see table). The price is partly attributed to the fact that it has a freehold tenure and is located within prime District 10, notes Lim, who brokered the sale.
Last December, Singapore-listed real estate management services provider and carpark operator LHN Group announced that it had completed the purchase of the carpark at Bukit Timah Shopping Centre for $16.2 million. The purchase was made in a joint venture, with LHN and GMTC, an investment vehicle of Low See Ching, holding a 40% stake each; and SM Ventures with a 20% stake. The purchase price for the 999-year leasehold carpark at Bukit Timah Shopping Centre with 381 parking spaces translated to $42,520 per spot.
Following close on its heels was the sale of Parklane Shopping Mall’s carpark at Selegie Road for $16.18 million, or $73,881 per parking space, which was completed early this year. The sale of Parklane Shopping Mall carpark was also brokered by Brilliance Capital’s Lim. The buyer is said to be a Singapore-based family office.
Brilliance Capital's Lim: Beyond the entry yield of 4%, the buyer could look forward to the potential change of use of the surplus parking space and further enhancement in the value of the asset (Photo: Samuel Isaac Chua/EdgeProp Singapore)
“The profile of buyers is varied,” says Lim. “Some, like LHN Group, want to operate the carpark themselves; while others prefer a buy-and- leaseback arrangement.”

Recurring income

The current owner of the multi-storey carpark at People’s Park Complex is a privately held investment company Xiang Loong Pte Ltd, which had purchased it, along with the F&B unit, in 2012. According to Linus Lim, a director of Xiang Loong, based on the asking price of $42 million, the gross yield for the carpark is about 4%.
This is in line with the gross yields of 4% achieved for the last few carpark deals, says Brilliance Capital’s Lim.
“In general, carpark revenues in the city area have been hit by people working from home,” notes Xiang Loong’s Lim. “Thankfully for People’s Park Complex, the trade mix has changed in recent years; more supermarkets and grocery shops having opened. People still need to buy necessities even during the circuit-breaker and the recent Phase Two (Heightened Alert),” he adds. “The carpark income has therefore not been as affected.”
In recent years, the rooftop carpark has morphed into a pop-up event space with getai shows, group yoga, outdoor concerts and movie screenings. The F&B unit had started to draw a hipster crowd, especially when it was tenanted for three years by local tapas bar Lepark. When that closed, it was succeeded by Miss Chinatown, a local gastro bar concept by local singers and songwriters Jack and Rai, who are also behind the Flying Squirrel sushi bar on Amoy Street. Miss Chinatown closed last year during the pandemic. A new tenant, a Chinese restaurant, is expected to move in.
The 2,809 sq ft restaurant unit is on the rooftop of the carpark - EDGEPROP SINGAPORE
The 2,809 sq ft restaurant unit is on the rooftop of the carpark on the sixth floor (Photo: Brilliance Capital)
The existing carpark owner is willing to explore a sale-and-leaseback arrangement for two years with the incoming buyer, says Xiang Loong’s Lim. After all, the owner is operating the carpark on its own. The F&B unit is tenanted, and that enjoys another stream of recurring income. “Carpark operations are relatively low-maintenance but it is a business with a recurring income,” he says. “The users of the carpark have to pay before they leave. You don’t need to engage an agent to manage the asset on your behalf.”

Beyond parking

Apart from local investors, family offices and carpark owner-operators, Brilliance Capital’s Lim sees interest in such carpark assets coming from overseas investors, especially those from China and Hong Kong, who are familiar with investing in such assets.
In Singapore, such strata-titled carparks are limited to buildings that had their planning approval before 1970. Subsequent to that, carparks were considered an amenity and part of the common area. Carparks are no longer allowed separate strata titles. Consequently, it is “one of the most tightly held, and sought-after asset classes”, notes Brilliance Capital’s Lim.
Besides communal activities like yoga and movie screening, the rooftop carpark is an ideal venue for car shows too (Photo: Brilliance Capital)
She sees opportunity for uses beyond a carpark for the rooftop space which is 4,000 sq m (43,000 sq ft) in size. Besides communal activities like yoga and movie screening, the rooftop carpark is an ideal venue for car shows too, she says. Other activities include a mobile food street to maintain the heritage of Chinatown, she adds.
Given that it is an open-air rooftop space, it is also ideal for the installation of solar panels for the energy needs of the carpark and to sell the excess solar energy back to the grid, says Xiang Loong’s Lim. Meanwhile, the carpark can be rented out to those who need space for their new or used cars, he adds. The future owner could also consider installing charging stations for electric vehicles within the carpark, he observes.
With the authorities limiting the amount of parking space in new developments in their effort to encourage Singaporeans to go car-lite, existing developments with ample parking space could benefit, Brilliance Capital’s Lim points out. People’s Park Complex is located on the edge of the CBD and is next to Chinatown MRT Station, which is an interchange for the Downtown and North-East Lines. “Due to the limited car parking lots and significant high parking costs in core Raffles Place and Marina Bay CBD, the People’s Park Complex carpark is likely to be a beneficiary as more people adopt the park- and-ride scheme when they head back to work,” she notes.
People's Park Complex is next to the Chinatown MRT interchange station - EDGEPROP SINGAPORE
People's Park Complex is next to the Chinatown MRT interchange station for the Downtown and Northeast Lines (Photo: Brilliance Capital)
She sees an opportunity for the future buyer of the carpark at People’s Park Complex to enhance its value through conversion of surplus parking space into higher-value uses. Some options include self-storage, e-commerce space, capsule hotel or hostel, subject to approval by the authorities.
At Parklane Shopping Mall, the carpark owner has received in-principle approval from the authorities to convert part of the carpark into a capsule hotel. Meanwhile, LHN and its joint-venture partners have received approval to convert some of carpark space into self-storage space.
“Beyond the entry yield of 4%, the buyer could look forward to the potential change of use of the surplus parking space and further enhancement in the value of the asset,” says Lim.

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