Hind Group is selling Naumi Liora, a 79-room boutique hotel housed in 10 adjoining freehold conservation shophouses in Chinatown.
The price is understood to be S$75-S$76 million, which works out to about S$2,800 per square foot on a gross floor area (GFA) of just over 27,000 sq ft.
The shophouses, which are along Keong Saik Road, span two storeys and an attic.
Hind Group, controlled by the Jhunjhnuwala family, bought the property in 2011 - when it was known as The Saff Hotel - for nearly S$42.1 million. The property was spruced up and then relaunched under the group's Naumi brand the following year.
Rooms at Naumi Liora cost S$150 to S$230 a night.
When asked why Hind Group is selling the hotel, its founder and managing director Surya Jhunjhnuwala said: "Our current strategy, going forward, is to focus on what Naumi does best - offering a bespoke luxury experience.
"We now find that Liora does not fit into this mould, and as a group, we will be focusing on expanding to properties that can fulfil this."
The new owner of 47 to 65 Keong Saik Road is 8M Real Estate, a privately-held boutique property investment group founded in 2014 by Ashish Manchharam.
8M Real Estate said the Hind Group may continue to operate the Naumi Liora for about a year after the property transaction is completed next month.
At the moment, the ground floor of two of the shophouses is leased to Loh Lik Peng's Unlisted Collection, which operates The Library, a cocktail bar styled like a speakeasy.
Some hotel rooms are now on the ground level of some of the shophouse units, and Mr Manchharam plans to convert these into food and beverage (F&B) outlets.
"We want the entire ground level of this asset as F&B outlets because this provides higher value from a rental perspective. Keong Saik is an established F&B location and we plan to curate new concepts to enhance the area's pull.
"This would be similar to what we did at 112 to 116 Amoy Street, where we carved out six new F&B outlets from the space that was previously leased to a single Chinese restaurant."
The upper levels of the Keong Saik Road property could remain as a hotel or be converted to offices to optimise the large floor plate, he added.
In April, 8M Real Estate had picked up three adjoining shophouses at 28, 30 and 32 Ann Siang Road, a corner island site, for S$52 million.
It is also understood to have acquired three adjoining 999-year leasehold shophouses along Boat Quay for S$32-S$33 million. The shophouses have a total land area of about 4,000 sq ft and a GFA of around 11,500 sq ft.
One of the shophouses is tenanted; the other two are empty.
The Boat Quay and Keong Saik Road acquisitions were made through sale of shares in the companies owning the respective properties; the deal at Ann Siang Road is an outright property purchase.
Including its latest buys, 8M Real Estate now has a portfolio of shophouses worth more than S$400 million. Its earlier acquisitions are in places like Gemmill Lane, Amoy Street, Tanjong Pagar Road, Neil Road, Craig Road and Hongkong Street.
8M Real Estate is owned by Mr Manchharam, together with some investors.
The Ann Siang Road property spans three storeys in addition to a basement and rooftop area. The building is named The Club and leased to Harry's Hospitality, which runs a mix of four F&B outlets and a 20-room hotel.
The lease with Harry's Hospitality has another 21/2 years to go. Its current rental reflects about 3.5 per cent net yield based on 8M Real Estate's purchase price.
Hind Group, after selling Naumi Liora, will be left with only one hotel in Singapore - Naumi Hotel in Seah Street, near Raffles Hotel.
Mr Jhunjhnuwala noted that this property has already been upgraded twice, the last time being in 2014.
He added: "This will be our flagship hotel, as we have spent tens of millions on the upgrades.
"In fact, there are plans for a further facelift so that it remains one of the top luxury boutique hotels in Singapore."
Hind Group also owns a 200-room hotel in Auckland Airport, which is being refurbished. It will be flagged as a Naumi by September.
It also owns Rendezvous Sydney Central, for which there are plans for a S$30 million upgrade to a Naumi Hotel.
Mr Jhunjhnuwala, whose family once owned the former Imperial Hotel in the River Valley/Jalan Rumbia area, said: "We are now embarking on an ambitious expansion plan and looking to acquire hotel properties globally, with investments up to half a billion Singapore dollars in the next three years.
"We are in negotiations for acquiring hotel properties in Australia, New Zealand and London. Naumi Hotels is a Singapore brand and will continue to have its headquarters here."
According to an analysis of URA Realis data as at Wednesday, 49 caveats totalling S$369 million were lodged for shophouse purchases in the first five months of this year.
However, this figure excludes deals for which buyers have not lodged caveats; this could be the case for those involving share sales in companies that hold shophouses.
8M Real Estate's recent purchases of the Boat Quay and Keong Saik Road properties totalling about S$108 million are instances of this.
Shophouse sales volumes and transaction values are continuing to hold, reflecting sustained interest in this niche asset class. Shophouses continue to be sought after due to their limited supply.
Buyers include local and foreign ultra-high-net-worth investors and family funds which are taking a mid- to long-term view.
The pool of serious investors exploring this asset class will widen further with the entry of more boutique institutional funds exploring shophouses to add to their portfolio for diversification.
Adapted from: The Business Times, 9 June 2017