OCBC has sold eight shophouses and strata shop units for S$31.7 million within a year of putting up for sale a portfolio of 38 such properties islandwide.
The latest transacted was a three-storey freehold shophouse at 735 Havelock Road, which was sold for S$4.5 million to a private company in February, according to the caveat lodged, or S$1,443 per square foot (psf) based on gross floor area (GFA).
Another shophouse that OCBC sold recently was a two-storey freehold shophouse at 155 Upper Paya Lebar Road in December. This went for S$2.6 million or S$1,442 psf of GFA to a Chinese couple who incorporated a company to acquire it. Last October, OCBC sold one floor of a strata shop at 910B Upper Thomson Road for S$2.75 million or S$2,165 psf based on GFA.
OCBC had reportedly arranged the properties in several baskets in April last year to be marketed by different property agencies.
On the encouraging sales pace, OCBC Property Services managing director Vincent Soh noted that shophouses, unlike residential properties, are less affected by the property cooling measures, due to their limited supply and their unique characteristics.
He said: "Hence, in spite of the soft property market environment, they continue to be an attractive investment alternative as they provide steady yield and good potential for capital appreciation.
"It is also worth noting that buyers of shophouses are typically niche investors who take into account the property's location, flexibility of use, potential of further intensification as well as their specific needs."
Separately, OCBC has launched a public tender of four adjoining three-storey conservation shophouses at 292, 294, 296 and 298 Joo Chiat Road. The tender closes on March 8. Based on a CBRE statement in January that did not disclose the owner, these shophouses have a combined land area of 7,616 sq ft and gross floor area of 17,980 sq ft. Since new extensions within the conservation guidelines are permitted up to a building height of five storeys, there is potential to increase the gross floor area to about 22,848 sq ft, said the sole marketing agent.
Knight Frank executive director and head of commercial sales Mary Sai noted that of the properties which OCBC has put up for sale, those that attracted keen interest were those with good road fronting and decent yields.
OCBC shophouses span across locations such as Havelock, Geylang, Upper Thomson and Upper Serangoon roads; the strata shop units are located in places such as Jalan Besar Plaza, Hoa Nam Building along Foch Road, Balestier Point, Sixth Avenue Centre and Upper Serangoon Shopping Centre.
Also for sale are HDB shophouses in locations such as Bishan, Aljunied, Jurong Gateway Road and Yishun Ring Road as well as shops in HDB estates such as Ang Mo Kio and Bukit Batok.
Strata shophouse transactions have remained resilient as investors see these assets as a hedge against inflation and believe in the long-term prospects of capital appreciation, Ms Sai said. "These buyers are usually long-term investors, not speculators."
But she conceded that yields from shophouses have come down to less than 3 per cent, from the historical 4 to 5 per cent, when prices were lower. Given the softness in the leasing market, owners are more eager than before to keep their tenants.
Though the number of shophouse transactions dropped to 85 in 2015 from 94, the total transaction value in 2015 was 5.7 per cent higher at S$593.5 million, said Knight Frank.
Source: Business Times, 4 Mar 2016