A FUND managed by Phoenix Property Investors has made its maiden acquisition in Singapore.
The Pan-Asian private equity property fund manager is buying a row of six shophouses along Peck Seah Street near Tanjong Pagar MRT Station for S$42.8 million. The price works out to S$2,155 per square foot (psf) on gross floor area (GFA) of 19,860 sq ft. The shophouses are on 8,213 sq ft of land that has a balance lease tenure of about 78 years.
Phoenix is buying the shophouses from K Line (Singapore), which has occupied the premises for the past 171/2 years. The Japanese shipping line will move out of the shophouses in March this year and relocate to a CBD office building as it has outgrown the premises and needs to expand to a bigger space.
Located at 48 to 56 Peck Seah Street, the shophouses are on a site zoned for commercial use under the Chinatown (Tanjong Pagar) Conservation Area in Urban Redevelopment Authority's Master Plan 2014. They have a street frontage of about 33 metres and have two storeys and an attic.
CBRE brokered the sale through a tender exercise that closed on Dec 9 last year. "The tender attracted both local and foreign bidders, comprising a wide profile of prospects including property funds, corporates and family offices," said Sammi Lim, associate director, investment properties, at CBRE.
"This is the first major shophouse transaction of 2015, and could create good momentum for this segment for the rest of the year. Both end-users and investors continue to be on the lookout for a contiguous row of shophouses as well as units that are reasonably priced."
Although the S$42.8 million paid by Phoenix Property Investors is below the S$49 million asking price for the property when its sale was launched last October, it is nevertheless in line with market values, according to Ms Lim. "Recent comparable transactions along Tras Street and Amoy Street have been around S$2,000 psf on GFA."
An industry observer commented that the pricing for the Peck Seah Street deal was higher than his expectation. "A big-ticket conservation shophouse deal on a site with 70-plus years balance lease would typically be expected to fetch below S$2,000 psf currently,"
Phoenix Property Investors declined to comment on its plans for the Peck Seah Street shophouses. Market watchers expect it to spruce up the asset before leasing it out.
Founded in 2002 by Samuel Chu and Benjamin Lee, Phoenix is one of the biggest private equity real estate fund groups in Asia. Since its inception, the group has raised about US$2 billion of equity for property investment and development opportunities in Asia. It has a network of affiliated offices in Asia, the largest of which is in Hong Kong; its other offices are in Taipei, Tokyo, Singapore and Shanghai.
"We will continue to look for good investment opportunities in Singapore. We're keen mainly on residential, office and retail properties - both investment and development properties," a representative from the group told BT on Thursday.
Commenting that the "long-term outlook for the real estate market in Singapore is positive", the group noted that the properties in the Tanjong Pagar district are benefiting from the transformation that is taking shape with new high-end residential projects, hotels and office towers that will boost the area's vibrancy.
Conservation shophouses along Peck Seah Street offer the attraction of "good visibility, close proximity to Tanjong Pagar MRT Station and ample public car parking", the group added.
Source: Business Times, 9 Jan 2015