OCBC seems to be on a roll selling conservation shophouse properties of late.
It recently sold a pair of adjacent freehold shophouses at 11 and 13 Bukit Pasoh Road for S$25 million. The buyer is understood to be the Leong family behind the famous homegrown Axe Brand medicated oil. The price works out to S$2,940 per square foot on the gross floor area (GFA) of 8,503 sq ft. The gross yield is about 1.5 per cent based on the existing rental income from the property.
Spanning three storeys and a mezzanine level, the shophouse pair is full leased to six tenants - a spa and an aesthetics clinic (both at street level), a dance studio and an office tenant on the second level, and two office tenants on level three, which is linked to the mezzanine floor.
OCBC has owned the two properties since 1935 and the last major refurbishment on the asset was done in 2012.
Shophouses along Bukit Pasoh Road are seldom available for sale as the majority are owned by clans and associations. Substantial interest for the properties was received via the competitive bidding exercise. The two shophouses have a combined land area of 2,926 sq ft zoned for commercial use and are located in the Bukit Pasoh Conservation Area within the Chinatown Historic District.
OCBC has sold two other conservation shophouses in the past couple of months: 60 Boat Quay and 18 Circular Road at S$7.33 million and S$7.2 million, respectively. Both are three-storey, 999-year leasehold properties and fully leased. Their prices reflect gross yields in excess of 2 per cent.
60 Boat Quay's price works out to S$3,139 psf on GFA, and that of 18 Circular Road, S$2,872 psf. The Boat Quay property has cocktail bar Ah Sam Cold Drink Stall as its second-floor tenant. Another four shophouses owned by OCBC have just been put on the market, this time along Amoy Street.
All four units are 999-year leasehold properties and have two storeys and an attic.
Three of the four properties are contiguous, at Nos 44, 45 and 46 Amoy Street and under one land title. Subject to approval from the authorities, these three shophouses may be subdivided into three separate titles. The fourth unit is a few doors away, at No. 49.
The indicative asking price of No 44, 45 and 46 Amoy Street is S$16 million while No 49 Amoy Street has a guide price of S$6.38 million - reflecting about $3,300 psf and close to $3,350 psf on GFA, respectively. The properties are sold with existing tenancies and buyers have the option to submit tender bids for either one or both clusters of shophouses.
Under Master Plan 2014 the properties are on land zoned for commercial use in the Telok Ayer Conservation Area within the Chinatown Historic District.
The asking prices are in line with recent transactions in the locale, citing the 60 Boat Quay transaction as well as a freehold shophouse in Erskine Road near the Maxwell Food Centre that recently went for S$4.25 million or S$3,210 psf on GFA and a 999-year leasehold shophouse along Ann Siang Road that changed hands in May this year at S$10.8 million or about S$3,703 psf on GFA.
Shophouses within the Central Business District remain highly sought after by investors due to their prime location and rarity. "Furthermore, continued strong inflow of liquidity from high net worth foreign investors and opportunistic funds seeking quality commercial assets also make such shophouses a key investment target.
Agents note that shophouses that are on sites with full commercial zoning are open to purchase by foreigners. Moreover, there is no additional buyer's stamp duty or seller's stamp duty on such properties.
Adapted from: The Business Times, 20 September 2016.