Conservation Shophouses

Row of six freehold shophouses in Joo Chiat up for sale via public tender.

The Singapore Shopping Centre is located opposite Dhoby Ghaut MRT, and the area is "poised for a major rejuvenation with the redevelopment of Park Mall just across the street", said marketing agent SRI.

A ROW of six adjoining three-storey shophouses along Joo Chiat Road has been put for sale via public tender, real estate services firm CBRE said on Wednesday.

To be sold as a bundle, the conservation shophouses are located at 454, 456, 458, 460, 462, and 464 Joo Chiat Road. They sit on a freehold site of about 7,400 square feet (sq ft) and the total existing built-up area is around 13,000 sq ft.

The property is zoned for commercial use with a plot ratio of 3.0 and a maximum allowable gross floor area (GFA) of some 22,200 sq ft, under the Urban Redevelopment Authority's Draft Master Plan 2019.

CBRE said the buyer can choose to either immediately receive stable rental income based on the current GFA, or value-add to the property and fully maximise the allowable GFA by building a rear extension, subject to the authorities' approval.

Alternatively, the buyer can configure the space to suit his or her own-use requirements or to cater to the needs of the tenants, CBRE added.

The public tender exercise will close at 3pm on Aug 30.

CBRE's associate director of capital markets, Yap Hui Yee, said: "We expect robust interest in this property due to the rarity of a row of six freehold conservation shophouses with existing F&B (food and beverage) approvals in a strategic location being made available for sale."

There will be no additional buyer's stamp duty or seller's stamp duty imposed on local or foreign buyers.

Joo Chiat is characterised by a mix of colourful shophouses of Peranakan heritage that house popular F&B shops, trendy bars and hipster boutiques. One of the six shophouses is tenanted to a homegrown cafe brand, Sinpopo, Ms Yap said.

Source: Business Times, 18 July 2019

Spanish tycoon paying huge premium for Stanley St shophouse


The nearly S$22.1m Ricardo Portabella Peralta is paying is about 36% or S$6m more than what the seller paid less than a year ago

SPANISH tycoon Ricardo Portabella Peralta continues to expand his portfolio of conservation shophouses in Singapore, paying nearly S$22.1 million for a three-storey conservation shophouse at 29 Stanley Street in the Central Business District (CBD).

This reflects a whopping premium of about 36 per cent to the previous transacted price for the property less than a year ago.

The seller, a seasoned property investor with interests in the fresh produce trade and food & beverage business, paid nearly S$16.2 million for the property in the second half of last year, The Business Times understands.

Located near the Telok Ayer MRT Station, the shophouse is on a site with 99-year leasehold tenure starting from Dec 17, 1990, leaving nearly 71 years' balance lease.

The price being paid by an entity linked to Mr Peralta works out to S$3,400 per square foot (psf) based on the the property's gross floor area (GFA) of about 6,500 sq ft. Some market watchers consider this to be on the high side.

The price the seller had paid for the property last year worked out to around S$2,490 psf on GFA.

BT reported last month that tycoon SP Tao's vehicle Shing Kwan is selling 87 and 88 Amoy Street, also on a site with nearly 71 years' balance land lease, for about S$39 million; this translates to around S$2,664 psf on the total GFA of 14,641 sq ft.

That said, Duck & Hippo group founder James Heng last year paid S$4,259 psf on estimated built-up area for 21 Boon Tat Street, though that property is on a site with 999-year leasehold tenure.

All three properties - on Boon Tat, Amoy and Stanley streets - are within the Telok Ayer Conservation Area, a buzzing F&B and lifestyle hub in Singapore's CBD.

At 29 Stanley Street, the ground floor is leased to modern sushi and cocktail bar Chi Kinjo. The upper levels are approved for office use.

The shophouse is Mr Peralta's latest acquisition on Stanley Street, where he owns, among other properties, the next-door unit at No 30, which he bought in 2016.

Other locations where entities linked to him are understood to own shophouses include Telok Ayer Street, Amoy Street, Boon Tat Street, Pagoda Street, Ann Siang Road and Craig Road.

Industry observers say things are looking up for the shophouse market. Last July's cooling measures targeting the residential property sector have helped to divert investment interest, including from foreigners, to the commercial property segment. Conservation shophouses, especially in the CBD and Chinatown (Districts 1 and 2), stand out for their scarcity value.

Moreover, they offer relatively higher yields and are easier to get financing for, compared with residential properties.

And whereas there are restrictions on the purchase of landed residential properties by foreigners, they may freely buy shophouses on sites that are fully zoned commercial.

This gives them ownership of the land title, and therein lies the attraction of such shophouses to foreigners.

Source: Business Times, 11 Mar 2019

The 3 Liang Seah units are held under a single land title and sit on a 2,694 sq ft site


The 3 Liang Seah units are held under a single land title and sit on a 2,694 sq ft site

THREE adjoining shophouses at 33 Liang Seah Street have been launched for sale via private treaty at S$30 million, while six conservation shophouses at Desker Road are up for auction.

In a press statement on Thursday, marketer for the Liang Seah shophouses, Colliers International, said the three units, which are held under a single land title, sit on a 2,694 square foot (sq ft) site within the Beach Road Conservation Area.

The estimated total gross floor area (GFA) stands at 11,500 sq ft, and the site is zoned "Commercial and Residential", with a gross plot ratio of 4.2 under the Master Plan 2014. The land also has a 999-year lease tenure beginning from 1827.

According to Colliers International, the buildings underwent extensive redevelopment works in 1997 when the shophouses were rebuilt, and the external facade was reinstated to its original specification. Located opposite Bugis Junction mall, the property is within walking distance from Bugis MRT station.

Said director of capital markets & investment services at Colliers International, Steven Tan: "Shophouses have always been a sought-after class of real estate among investors owing to their prime locations, heritage charm and scarcity. We expect to see keen investment interest for 33 Liang Seah Street amid the rising optimism in the property market in Singapore."

"The rare 999-year tenure of these shophouses and their prime location in the city centre will boost its potential for asset value retention and future capital appreciation," added Mr Tan.

Said Colliers International: "The property is currently multi-let with potential upward reversionary rents through repositioning."

Separately, PropNex on Thursday also announced the auction of a batch of six freehold conservation shophouses in Little India. The corner unit and five adjoining units at Desker Road were bought by their current owner in 2010 for S$10 million.

Farrer Park and Jalan Besar MRT stations are a short walk away, while shopping malls like City Square Mall and Mustafa Centre are within the vicinity.

Marrison@Desker - a 25-room hotel - operates on the second floor of the shophouses. There are also F&B (food and beverage) and retail units on the first level.

Taken together, the six shophouses occupy a total land area of 619.1 square metres (sq m), and a total build area of about 1,140 sq m. Their auction will be held on May 31.

Source: Business Times, 25 May 2018

Prime heritage play


Shophouse prices have appreciated significantly in the past year or so. What's fuelling interest in these prime conservation properties?

A NICHE market often bypassed by real estate investors due to its specific guidelines on use, the prime conservation shophouse market in Singapore's city core has been buzzing with activity of late. Shophouses in the CBD and Chinatown (the old postal districts 1 and 2) have seen increased transaction activity, along with price appreciation since the second half of last year. These properties, costing anywhere from S$7 million to S$25 million each and housing tenants ranging from hipster bars to au courant restaurants to boutique offices, are sometimes compared to Good Class Bungalows (GCBs) for their scarcity value.

But there is a key difference between the two property segments which also explains their appeal: whereas foreigners are not allowed to buy landed homes in GCB Areas, they may acquire shophouses on sites that are fully zoned commercial. This gives them ownership of the land title, and therein lies the attraction of such shophouses to foreigners.

One investor also tells BT he prefers to park his money in commercial shophouses instead of residential properties, as "yields are higher; moreover there is no additional buyer's stamp duty, it is easier to get financing and no stamp duty payable on exiting the investment".

The heightened activity this year is partly led by supply.

A substantial portfolio of shophouses in the Boat Quay/Circular Road and New Bridge Road areas was put on the market by the family of the late Teochew businessman and philanthropist Lee Wee Nam.

The nine shophouses and one commercial building were snapped up in March for S$82.5 million by homegrown property investment group 8M Real Estate.

Positive sentiment from the overall improvement in the property market and more sanguine economic outlook has also spilled over to the shophouse segment; investors are being drawn by prospects of further price appreciation.

"Five years ago, freehold/999-year leasehold shophouses in Districts 1 & 2 (D1 and D2) were typically trading between S$2,000 per square foot (psf) and S$2,500 psf on built-up area. This has since increased to about S$2,750-S$3,250 psf in late 2017 till now," says Clemence Lee, associate director of capital markets at JLL.

D1 includes areas such as Boat Quay, Club Street, Amoy Street, Telok Ayer Street, Temple Street and Pagoda Street. D2 includes Bukit Pasoh Road, Jiak Chuan Road, New Bridge Road, Keong Saik Road and Teck Lim Road.

Along Tanjong Pagar Road, in District 2, the steady price rise in the past couple of years is apparent in three transactions along the same stretch: from S$2,166 psf for Nos 15-23 in 2016, to S$2,400 psf for Nos 29 and 31 in 2017, to S$2,466 psf for Nos 25 and 27 earlier this year. This translates to a total price gain of nearly 14 per cent over two years. All the shophouses in these three deals are on land with the same tenure: 99 years starting December 1994.

The big owners of conservation shophouses in Districts 1 and 2 include homegrown outfits 8M and Clifton Partners, SilkRoad Property Partners, Hongkonger Tony Chen of Arcc Holdings, Spanish tycoon Ricardo Peralta and Stanley Quek of Region Development.

8M, whose shareholders comprise Ashish Manchharam and institutional investors, owns more than 40 shophouses in Districts 1 and 2 worth about S$500 million - bolstered by its recent S$82.5 million acquisition. Set up in 2014, 8M has so far not sold any of its properties.

Mr Chen, who owns 60 conservation shophouses in Chinatown, Kampong Glam and Little India, is a long-term investor. "We are passionate about heritage shophouses. Owning a conservation shophouse is like owning a piece of unique artwork sitting on land. It has to be preserved," says the Singapore PR who has been living here for 30 years.

Clifton Partners and its affiliates currently own 14 shophouses in D1 and D2 - with a combined value of about S$250 million.

"We look for conservation units with potential for value adding and restoring to their original condition, boosting rentability in the process," says Zain Fancy, who owns Clifton. He was formerly Morgan Stanley's Asia real estate investment head.

In the past five years, the group and its affiliates have sold 15 conservation shophouses for close to S$160 million.

"We more than doubled our investment. The lowest pretax internal rate of return for a monetised shophouse was in the low-double digits per annum," says Mr Fancy.

Sammi Lim, director, capital markets, CBRE, says: "The investment outlook for conservation shophouses remains healthy. URA's conservation framework and guidelines will ensure that the capital values of these assets hold steady.

"Their scarcity and sound real estate fundamentals have bolstered investors' confidence that these heritage assets are prized and worthy of long-term investment."

Yet, agents say yields for commercial shophouses in the CBD have fallen over the past year as rental increases have not kept pace with price gains. For freehold/999-year leasehold shophouses, gross yields have eased from 3 per cent a year ago to 2.5-2.7 per cent. For 99-year leasehold shophouses, yields have slipped from 3.5 per cent to 3 per cent, said Mr Lee of JLL.

Rents for food and beverage (F&B) outlets on the ground floor of shophouses in D1 and D2 have remained flat in the past year, while rents for office space (typically on the upper levels of shophouses) have inched up a few per cent.

Prime street frontage

Perhaps for this very reason, shophouses continue to attract tenants.

According to JLL's data, it costs about 20-30 per cent less to rent ground-floor F&B space in shophouses in D1 and D2 compared with leasing the same amount of space in a nearby mall or mixed-development. "This is partly because there is no gross turnover (GTO) rent component in shophouse leases; tenants pay only a fixed rental," says the property consulting group's national director of retail Gary Nonis.

An F&B tenant can expect to pay S$10,000 to S$48,000 in monthly rental for ground-floor shophouse space of 800 to 4,000 sq ft (or about S$12 psf on average) in D1 and D2 - against S$14,000 to S$65,000 (including the GTO rent component) in a mixed development in the financial district.

The prime street frontage and flexibility of operating hours also draw tenants, says Knight Frank executive director Mary Sai. "There is also more flexibility on the way you do your layout and how you dress up the shop - unlike in a shopping mall. For a shophouse, although you have to follow URA guidelines, your facade can be quite different; you don't need to be consistent with your neighbour."

Mr Nonis points to other reasons why it makes good sense for restaurants to be in shophouses: "While F&B operators in a mixed development often rely on a captive crowd (office workers in the building) and patrons from nearby properties, the downside of operating within a mixed development, specifically within the CBD, is that it is usually a weekday trade.

"On the other hand, shophouse clusters attract not only those who work in nearby developments but also tourists."

Mr Lee says that malls draw the usual F&B tenants and tend to be more homogenised; conservation shophouses make for more experiential, destination lifestyle offerings in a heritage setting. "The younger generation likes the idea of finding a hidden restaurant or bar."

Tenants looking for non-conventional office space - at rentals much lower than prime office buildings - have also flocked to shophouses. Office tenants leasing space on the upper floors of shophouses in the financial district can expect to pay about S$5-8 psf a month for say 1,000 to 5,000 sq ft, depending on the quality of the shophouse and its location - lower than the S$10-12 psf for similar-sized space in prime Grade A office buildings, says JLL's regional director of markets Tahlil Khan.

"Shophouses tend to draw occupiers that do not require the conventional corporate image of being in an office tower - including media and PR/advertising firms, smaller law firms, tech companies and business incubators," he added.

Co-working space operator The Working Capitol is one that has taken to shophouses in a big way. It signed master leases of longer than the standard three years at 1 and 3 Keong Saik Road and for the second-level space at the neighbouring 120 and 122 Neil Road, giving it a total gross floor (GFA) area of 40,000 sq ft - enough to pack in 400 seats (from hotdesking to dedicated offices) catering to solo-preneurs to MNCs, an events venue that can seat 200 people, a cafe and four restaurants.

"Over here, our operation is so synonymous with the neighbourhood; the shophouse architecture and street landscape are such an integral part of our identity. It evokes a more emotional response compared with a glass office tower in the CBD," says The Working Capitol chief executive and co-founder, Benjamin Gattie.

The group has also leased all of 89 Neil Road which will give it an additional 25,000 sq ft GFA (for a further 300 seats) plus a 7,000 sq ft roof terrace; and has begun to operate in this space in phases since last month.

Apart from interesting restaurants and trendy offices, a row of adjoining shophouses also makes for a unique boutique hotel experience. Garcha Hotels acquired 28 conservation shophouses in three locations in 2012-2013 for a total S$148 million and spent a significant sum restoring them into three luxury hotels. Two are already operating: The Vagabond Club - a Tribute Portfolio Hotel in Syed Alwi Road and Six Senses Duxton. The third, Six Senses Maxwell, is slated to open later this year.

"For all three properties, on average, it has taken us about a year longer than we originally anticipated to restore the properties; they were full-gut renovations," says Satinder Garcha, chairman and CEO of the group.

"The biggest challenge is working within the conservation guidelines. The costs are generally higher; it is a lot more expensive to restore per square foot within a shophouse than to just build a new building - because there is a lot more complexity, and other than that, in the case of two of our three properties, putting it to a use that it was not originally built for. It is like working with a jigsaw puzzle. But then it is very rewarding to see it turn out actually." Mr Garcha notes that conservation shophouse prices in Singapore have gone up significantly in the past five to seven years because of the scarcity value. "And because of the heritage value, the appeal of these properties continually grows upon people. And I don't see that changing. I still see conservation shophouses as good investments for the long term."

There are about 6,760 shophouses in Singapore gazetted for conservation. They make up the bulk of the nearly 7,200 buildings gazetted for conservation.

"This is no mean feat for a small island and land-scarce city-state with competing land use needs. It is a testament to the importance we place on our built heritage and a holistic urban planning approach," says Teh Lai Yip, senior director, conservation, at the Urban Redevelopment Authority (URA). She was part of the team led by by Koh-Lim Wen Gin in the 1980s that championed the conservation cause. Mrs Koh-Lim retired as chief planner and deputy chief executive of URA in December 2008.

"Many other cities envy us," says Mrs Koh-Lim. "We are so small, with limited land and yet we can do conservation in a comprehensive way and there's enough critical mass and presence."

Nearly half or 3,320 of the 6,760 conservation shophouses are in the Historic Districts of Boat Quay, Chinatown, Kampong Glam and Little India. "Together as a district or as a street, I think these shophouses enhance the physical environment, the streetscape. Their presence enhances the built environment." For instance, the low-rise shophouses along Boat Quay provide 'urban windows' for the high-rise office buildings behind.

"So for the city as a whole, there is all this porosity, so the built environment as a whole is enhanced. Imagine if all the areas where you see conservation shophouses today were high-rise; there would be no breathing space," says Mrs Koh-Lim.

Architectural historian and anthropologist Julian Davison says: "The shophouse is very much a cultural signifier for Singapore. "A large part of Singapore's identity is wrapped up in its history as a port city in the late 19th and early 20th centuries and the ubiquitous shophouse defined the urban fabric of the city in that period and continued to do so until the early days of independence."

Post-independence, despite the pressures for redeveloping the city, the authorities managed to safeguard some precincts of shophouses in the Historic Districts.

Says Knight Frank's Ms Sai: "Shophouses remind us of our historic background, the immigrants who came here and wanted to have their accommodation and business in the same premises." Ms Sai herself grew up in a shophouse.

Her family used to run a coffeeshop downstairs and lived upstairs. That property was part of a row of shophouses right at the end of Tanjong Pagar and Anson Road - which was later torn down to make way for the container port.

"It was fun growing up in a shophouse. Amenities were just a few doors away. You had a barber shop, a prawn noodle shop, provision shop; there was even a wet market selling pork and vegetables within a shophouse. If you lived next to a pet shop selling birds, you would hear parrots repeating orders being shouted at the nearby coffeeshop in Hainanese."

Simon Monteiro, associate director of heritage buildings at Savills Singapore, who has been selling shophouses for nearly 25 years, says: "A conserved shophouse is like a time capsule. Each shophouse that has been gazetted for conservation brings you back to that era, what the architecture was at that time, the story of how our forefathers lived..."

Some feel however, that certain areas have lost some of that hallowed charm.

Mr Monteiro suggests it would be timely for the authorities to take a closer look at the tenant mix in certain conservation areas. "Today, there are too many Korean restaurants in Tanjong Pagar; it's like Little Korea."

"Perhaps, URA should adopt some sort of quotas on tenant mix in the Historic Districts to ensure they reflect the heritage of the place. I don't think we want tourists to label our heritage area as Korean Town.

"URA should research to create a balanced tenant mix, and educate owners that the objective of conservation is to show to the world our roots through these shophouses."

In a similar vein, Mrs Koh-Lim says: "For each of these Historic Districts, URA needs to play a more pro-active role in the place management; it needs to review the land-use control instead of just stating a broad category like 'commercial'.

"Perhaps it is timely to review and ask ourselves whether we should narrow down the kinds of trades to allow in these premises. After so many decades now, we should review and retake a new position, if you ask me. If you have the will, this can be done.

"You can have a five-year plan; it may not be feasible to implement things immediately, but gradually, you could encourage the owners and guide them back to retain some of the charm and character of the place.

"But it cannot be back to the 'good old days' for sure because some trades have vanished. Only the viable traditional trades that are still in demand - like medical halls, shops selling herbs, dried goods, traditional confectionery shops, etc - can afford the rentals."

Source: Business Times, 20 Jul 2018


Singapore co-working pioneer Impact Hub rebrands as Found, to open 3rd space in Amoy Street

SINGAPORE - Co-working space operator Impact Hub Singapore - said to be a pioneer in the business here - has rebranded as Found.

Found said on Wednesday (May 2) that the rebrand concludes the company's tenure with the global Impact Hub network, and marks its next steps in establishing itself as an independent, home-grown and South-east Asian brand.

Found added that it continues to be supported by longstanding partners and investors, including Lee Han Shih, the Pangestu family of Barito Group and RB Group. The company has built a community of 2,500 members and alumni, who collectively have raised more than S$380 million.

As part of the rebrand, Found will deepen its Members Growth services, which include coaching, mentoring and partnership programmes for its entrepreneurs. Since the company's founding in 2012, it has supported more than 75 organisations, such as DBS Bank, NTUC, P&G, Cartier, Liberty Mutual and JP Morgan, in their corporate innovation agendas.

Found will also extend its innovation-building capabilities to more firms based in Singapore and South-east Asia.

To kick-start its corporate innovation expansion plans, Found will launch a third co-working space in Amoy Street. The new 22,000 sq ft flagship campus, slated to open in September, will feature a 250-capacity event space, dedicated team rooms for corporate innovation teams and flexible spaces for fast-growing businesses.

Found said: "It will be home to a 50:50 mix of corporate innovation teams and high-growth start-ups - the first of its kind for any innovation hub."

Source: Straits Times, 2 May 2018

Demand for shophouse units to remain strong in 2018: CBRE


SHOPHOUSES are a unique and interesting asset class in Singapore. This asset class, comprising narrow small terraced houses with a sheltered 'five-foot' pathway in front, is an icon of Singapore's architectural history.

Many of these shophouse units were built prior to World World 2 and located in the old city centres.

Their rich historical heritage has resulted in many of them being gazetted for conservation, carefully restored and conserved according to regulatory guidelines.

Due to the rarity and cultural value of shophouses, interest in this asset class has been very consistent. Property companies and private equity funds have shown heightened interest in this niche market in the past year, and we expect interest levels to remain similar in 2018.

Ultra-high net worth individuals who take long-term views on preserving their capital in particular, are attracted to shophouses as they hold strong value. Investors can also use them for personal purposes.

Many of them see the intrinsic value in buying into a piece of heritage, and this asset is highly prized in land-scarce Singapore.

Freehold shophouses currently generate net rental yields in the range of 2 per cent to 3 per cent, while those for leasehold ones start from about 3 per cent onwards, depending on the property, tenure, and so on.

In terms of transaction prices, compared to 2016, the total transacted volume in terms of value and the number of transactions have increased in 2017, although this is still below the numbers locked in during 2013, which was considered one of the most active years historically for this asset class.

When available in the market, adjoining units of shophouses are increasingly popular as they are rarer to come by and the buyers can explore various usages for the premises by tapping the larger space configurations and economies of scale.

We have observed in the market that there are more estate sales among families who have owned the asset for generations and are looking to divest the shophouses and redistribute the funds. These families are focused on their non-property core business and are looking to make better use of their funds by cashing out.

Shophouse sellers also include funds who want to enjoy the capital upside from a purchase made five to 10 years ago.

The data on price movements only track general price movements, but in general, prices have remained stable, with a few stand-out assets traded at higher price points. Price points vary depending on the highest value and the best use in a specific location.

Shophouses which command a premium have a winning combination of a good location, solid frontage, a strong tenant profile, and the best use, be it for food and beverage, hospitality or retail use. Shophouses which have been upgraded through extensive asset enhancements, or have potential for further enhancement works to be carried out, also stand out.

Overall, investing in shophouses in Singapore is lucrative and future-proof due to the scarcity of this asset class that is able to hold its value even during economic downturns.

Source: Business Times, 3 Feb 2018

Smaller supply of quality units slows shophouse market in H2

THE shophouse market is poised for a slower second half after having hit high notes in the preceding two half-year periods.

The drop in transaction values comes not from sagging demand, but rather a lack of quality supply being offered for sale, said Clemence Lee, associate director of capital markets at JLL.

"Most of the demand for conservation shophouses would be in Districts 1 and 2, where a lot of the quality stock that had been put on the market was sold in the first two quarters of this year.

"Since then, not many new owners have made their properties available for sale."

District 1 includes places in the Central Business District (CBD) such as Amoy Street and Boat Quay; District 2 includes Chinatown, Tanjong Pagar Road and Duxton.

Industry players reckon many owners prefer to hold on to their properties for now, as they are eyeing capital appreciation.

Giving an investor's perspective, however, 8M Real Estate founder Ashish Manchharam said: "Shophouse prices have run up in the past 12 months, but rents have not caught up, leading to yield compression.

"Owners continue to expect higher prices, which has caused a price gap between buyers and sellers - resulting in limited transactions."

Property market observers suggest that some investors may be looking to switch to the residential sector, which seems to offer better value right now.

CBRE's analysis of URA Realis caveats data as of Tuesday found that the value of island-wide shophouse deals eased from S$344.9 million in the second quarter to S$207.6 million in the third.

Caveats lodged so far this quarter (the latest was on Nov 1) amount to S$88.2 million. More deals are in the works, but most market watchers do not expect the second-half tally to surpass the S$520 million achieved in the first half, which in turn exceeded the S$453 million in H2 2016.

That said, the full-year 2017 figure is set to be the highest in four years. Already, the year-to-date figure of S$815.7 million is ahead of the S$707.1 million for the whole of last year. The last peak was in 2013, when S$1.27 billion worth of shophouses changed hands.

These figures exclude deals for which buyers have not lodged caveats; this could be the case for transactions involving share sales in companies that hold shophouses. JLL highlighted three major non-caveated deals this year: These are the S$76 million sale of the Naumi Liora hotel comprising 10 adjoining shophouses in Keong Saik Road, the S$33 million sale of 70, 71 and 72 Boat Quay, and the nearly S$60 million sale of three shophouses in Amoy Street.

Simon Monteiro, associate director of heritage buildings at Savills Singapore, said investors are steering away from 99-year leasehold shophouses and waiting for 999-year and freehold ones to be put on the market. Investors typically find it harder to get a bigger loan quantum for shophouses with fewer than 70 years left on their leases.

Mr Monteiro also said that demand is stronger for conservation shophouses that are permanently approved for food & beverage use - compared to those granted temporary permission (TP) for such use. The Urban Redevelopment Authority usually grants only TP, ranging from one to three years, for F&B use for shophouses in places with traffic and car-parking issues.

F&B tenants pay the highest ground-floor rents in conservation shophouses, but these rents have generally been flat or even dipped over the past year, given the mushrooming of F&B outlets in recent years, as well as the generally soft economic conditions, said industry players.

Krystal Khor, director of Mondania, a property agency specialising in sales and leasing of shophouses, said: "Landlords are either signing lower rents or providing basic F&B provisions such as grease traps and electricity upgrades, the cost of which used to be borne by the incoming tenants in the past.

"However, premium locations with high foot traffic still command stable rents."

She added that landlords also invest significant sums to re-do the facade to draw F&B tenants.

Shophouse prices, on the other hand, have risen.

For example, said JLL's Mr Lee, prices of 999-year leasehold shophouses in Amoy Street were transacting at between S$2,300 and S$2,500 per square foot of built-up area last year and earlier this year. In the last six months, two transactions were made at higher prices - S$2,900 psf for 89 Amoy Street and nearly S$4,000 psf for 52 Amoy Street. Analysts pointed out that the high psf price for No. 52 was partly due to its smallish size and lower absolute price quantum.

That said, with the general price appreciation and softening rents, gross yields on conservation shophouses in Districts 1 and 2 have eased by 0.5 percentage point in the past year. Among freehold/999-year properties, the softening has brought yields down to between 2 and 2.5 per cent, and among shophouses with 70-odd years left on the lease, to 3-3.5 per cent.

CBRE director of capital markets Sammi Lim said buyers continue to be a mix of family offices (both local and overseas), ultra high net worth individuals (HNWIs) and property funds, although established property groups are also getting interested.

"Despite shrinking yields, Singapore's conservation shophouses continue to appeal to buyers who value the intrinsic attributes of these heritage properties. They get to buy into a piece of Singapore history, with prospects for long-term capital appreciation, given the limited stock of this property asset class."

Foreigners are allowed to buy entire shophouses, thus gaining ownership of land title - but only for shophouses that are on sites fully-zoned commercial and approved for commercial use.

The additional attraction of investing in commercial shophouses is that they are not liable for additional buyer's stamp duty and seller's stamp duty - unlike residential property.

Mr Lee of JLL expects prices to continue appreciating on the back of sustained demand and limited supply, though price hikes will be constrained by yield compression.

With limited stock of shophouses in the prime conservation shophouse districts 1 and 2, some parties are starting to look outside the CBD and in fringe areas such as Beach Road, Serangoon Road, Joo Chiat and the East Coast. "Fringe properties tend to have smaller quantums of less than S$5 million and slightly higher yields - which make them more attractive to HNWIs and family offices."

Sources: Business Times, 18 Nov 2017

Hotel off Keong Saik Road sold for S$31m; buzz over high of S$4000 psf set in Amoy Street


THREE adjoining freehold shophouses along Teck Lim Road off Keong Saik Road are being sold for S$31 million.

The shophouses at 12, 14 and 16 Teck Lim Road span three levels and a mezzanine floor, and currently house the 42-room Chinatown Hotel. The property has not had a major refurbishment for nearly 25 years.

The price works out to about S$2,770 per square foot based on an estimated gross floor area (GFA) of 11,200 sq ft.

This is similar to the approximately S$2,800 psf on GFA achieved in the recent sale of Naumi Liora, a 79-room boutique hotel located in 10 adjoining freehold conserved shophouses in Keong Saik Road.
In the latest deal, at Teck Lim Road, the seller is a family that has owned the property for more than two decades and who operates the hotel. The buyer is Hilltop Capital, whose shareholders are Aw & Sons Capital and Aw Kim Cheng Realty.

The deal was brokered by Cushman & Wakefield.

The buyer is expected to undertake a major revamp of the property. The Aw family's property portfolio includes The Offshore at 11, 12 and 13 North Canal Road - an integration of old and new shophouses, The property is tenanted to restaurants, a gym and other operators. The family has also developed residential projects in the prime Nassim and Jervois areas.

The three shophouses at Teck Lim Road have a land area of 4,152 sq ft.

Other recent shophouse deals include sales at Amoy Street, South Bridge Road, Ann Siang Road and Pagoda Street.

At Amoy Street, an entity linked to homegrown property investment firm Clifton Partners picked up a shophouse for S$21 million. This works out to around S$2,900 psf on built-up area of 7,225 sq ft; the 999-year leasehold property has three floors and an attic.

A Clifton Partners-linked entity has also bought 198 South Bridge Road, at the junction with Upper Cross Street, for S$11.8 million from Weng Cheong Company, one of Singapore's oldest goldsmith and jewellery companies and which operates at the premises.

The 999-year leasehold property has about 5,200 sq ft of built-up area over three levels.

Meanwhile, Spanish tycoon Ricardo Peralta continues his shophouse buying spree, acquiring 11 Ann Siang Road for S$9.1 million. He bought the next-door property last year from a Clifton-related entity for S$10.8 million. Mr Peralta is also buying 39 Pagoda Street for S$12.2 million or S$3,697 psf on built-up area.

Meanwhile, there has been some buzz in the market over a price of about S$4,000 psf on built-up area - one of the highest for the Singapore shophouse market - being recorded for 52 Amoy Street.

Loyalle Chin of PropNex, who brokered the deal, explained that this is partly due to the relatively low absolute quantum of S$7.1 million for the 999-year property, which has a land area of just 952 sq ft and a built-up area of about 1,800 sq ft spanning two levels and an attic.

"The buyer was willing to pay a premium because he likes the tenant profile, the fact that the shophouse is fully leased to F&B outlets, which typically can shell out higher rents."

The entire ground floor is leased to Wanton, Seng's Noodle Bar while cocktail bar Native occupies the upper levels.

The gross yield works out to 2 to 2.5 per cent, according to Mr Chin.

Clemence Lee, associate director of capital markets, Singapore, at JLL, said that on the whole, prices for prime conservation shophouses in Districts 1 and 2 have remained resilient - mainly due to a lack of quality shophouse offerings available in these areas, while buying interest among the boutique real estate funds, family offices and high networth individuals remains high.

"As more of such properties are getting snapped up, we expect prices to continue appreciating further as fewer of such opportunities are available in the market," he added.

Source: Business Times, 12 Jul 2017

ICC Court sets up case management office in Singapore


TO serve the dispute resolution needs of businesses in the region, the International Chamber of Commerce or ICC Court will set up a case management office in Singapore - the first international arbitral institution to have a physical presence here.

The new office is expected to start operating in the first quarter of 2018 at Maxwell Chambers.

Headquartered in Paris, the ICC Court will take up about 2,000 sq ft in the new Maxwell Chambers Suites - a conserved heritage building - which will be an expansion of Maxwell Chambers when the refurbishment works are completed in 2019.

Singapore is ICC Court's fourth overseas case management office after Hong Kong, New York and Brazil. In 2016, it administered almost 1,000 arbitral cases from around the world.

Senior Minister of State of Ministry of Law (MinLaw) Indranee Rajah said the move "will augment Singapore's offerings and raise our hub status up one notch".

Speaking at the third ICC Asia Conference on International Arbitration on Wednesday, Ms Indranee said: "It is a vote of confidence in Singapore as a base for major players to access and capture opportunities, and to be part of Asia's growth story."

MinLaw and the ICC Court announced their collaboration at the signing of a memorandum of understanding - a milestone agreement - in Singapore on Wednesday.

Under the partnership, MinLaw and the ICC Court will work together to develop and promote Singapore as a seat and venue for arbitration in Asia through advancing thought leadership, developing manpower talent and arbitration services, and undertaking joint marketing.

Said Alexis Henri Louis Mourre, president of the ICC Court: "With its two case management teams in Hong Kong and Singapore, as well as its representative office in Shanghai, the court is now able to offer a unique international arbitration platform across the entire Asian continent."

The new case management office forms part of a growing presence for ICC in Singapore.

Following the establishment of an Asia Regional Office, ICC's first regional office outside of Paris, in 2002, ICC and IE Singapore joined forces in 2015 to establish the ICC Academy, an e-learning platform for trade and banking professionals. Both outfits are currently located at Maxwell Chambers.

Singapore is a key international dispute resolution centre, offering a full suite of services including international arbitration, mediation and litigation. It is one of the top five seats of arbitration in the world and has been the leading seat of arbitration for ICC cases in Asia for the last seven years.

Source: Business Times, 29 June 2017

Strong take-up drives expansion at Maxwell Chambers


THE Ministry of Law (MinLaw) on Thursday announced that 65 per cent of the new office space at 28 Maxwell Road has already been taken up even before refurbishment works begin.

To meet the strong leasing demand, the ministry will build a second annexe block to add 3,500 square feet (sq ft) of office space, on top of the 120,000 sq ft expansion that was originally planned.

The whole development has also been renamed Maxwell Chambers Suites to reflect its new role as an integral part of Singapore's dispute resolution ecosystem, Indranee Rajah, Senior Minister of State for Law and Finance, said in her keynote address at the groundbreaking ceremony.

When completed in 2019, Maxwell Chambers Suites will also provide a 24-hour public thoroughfare to allow easier pedestrian access between Tanjong Pagar MRT station and the Chinatown area.

In all, Maxwell Chambers Suites will provide about 50 new offices over four floors for international dispute resolution institutions, arbitration chambers, law firms and ancillary legal services.

Existing tenants have also decided to expand their floor plates, with The Arbitration Chambers and One Essex Court more than doubling the floor space of their offices.

MinLaw in January this year said it would be taking over the conserved building at 28 Maxwell Road, where the Red Dot Traffic Building once stood, for the expansion of Maxwell Chambers.

This is in line with the ministry's plans to take dispute resolution work in Singapore up another notch. It has identified investor-state dispute settlement as a new growth area for dispute resolution work in Singapore.

This refers to resolving investment disputes between foreign investors and host states. For example, if an investor put his money in a highway project, and the host government did something to impede the construction of the infrastructure, this matter would require arbitration to resolve. Such work typically involves complex and high-stake cases.

As at June 2017, around 10 investment arbitration hearings were held or are going to be held in Singapore this year, double the number in 2013.

Ms Rajah said: "Locally, we already have expertise in this area. A couple of our senior counsels, Mr Andre Yeap and Mr Alvin Yeo, have already been involved in cases like these, and there are others as well who have been advising...

"There are also international practitioners in the space who are doing it elsewhere at the moment. We would like to attract them to come here and do their arbitrations here. And with the expansion of Maxwell Chambers Suites, it will be a very conducive environment for investor-state arbitration," she told reporters.

Maxwell Chambers is the second most preferred hearing centre in the world for arbitration, after the Hong Kong International Arbitration Centre.

At the event, Philip Jeyaretnam, chairman of Maxwell Chambers, also described the genesis of the idea - how it first occurred to him that the former Red Dot building could become an extension to the existing Maxwell Chambers.

While walking around the Red Dot building one day, he ventured up to the upper floors and was struck by the two courtyards and clustering of small offices around them.

"To me, this strongly evoked the warrens and courtyards of legal London. Small offices clustered around open spaces fit the instincts of barristers and advocates who need their own offices to prepare for cases and write opinions, while having opportunities to interact with their peers including over meals and, dare one say, drinks. Think of the buzzing beehives of the Inns of Court."

The building at that time, however, was being used by design-type firms and many units were unoccupied.

It seemed to him that the design companies felt cramped by the small spaces rather than liberated. He became convinced that the building would be much better suited to lawyers than designers.

In the bigger picture, Maxwell Chambers Suites is expanding alongside a wave of other new projects in the vicinity, including Frasers Tower, Tanjong Pagar Centre, OUE Downtown Gallery, as well as the redevelopment of the CPF building by an Ascendas-Singbridge consortium.

All this is part of the government's effort to transform Tanjong Pagar. When completed, these developments together will create 300,000 square metres (sq m) of office space, 60,000 sq m of retail and F&B offerings, 1,200 hotel rooms and more than 1,000 homes.

Source: Business Times, 23 June 2017