31 Saik Keong Road is now a James Heng property after the built-up area’s purchase for S$4,300 psf
James Heng, founder of Duck & Hippo group is still on his collection streak for conservation shophouses.
His new investment is the S$14 million property at 31 Keong Saik Road or translated to S$4,300 psf.
The amount for the three-storey freehold shophouse is estimation for the built-up area. Moreover, it is much higher than the 21 Boon Tat Street purchase he made last September 2018, which totaled S$4,259 psf.
According to property agents, the price is already a record breaker for conservation shophouses located in Districts 1 and 2.
Based on information from market watchers, the Boon Tat Street property is good for the purpose of food and beverage on both levels.
However, the approval for F&B use at the 31 Keong Saik Road shophouse is only for level one. As per the street address, Boon Tat Street’s location is primer compared to 31 Keong Saik Road.
The places located in District 1 are the Central Business District particularly Boon Tat Street, Club Street, Telok Ayer Street, Amoy Street, and Boat Quay.
On the other hand, District 2 comprises of Kreta Ayer areas, Tras Street, Tanjong Pagar, and some areas of Chinatown.
Mr. Heng already made at least six purchases of conservation shophouses between 2017 and 2018, inclusive of his latest acquisition.
He also purchased other properties located along Teck Lim Road, Amoy Street, Liang Seah Street, and Ann Siang Road, on top of the Keong Saik Road and Boon Tat Street properties.
According to industry players, those who are known as high net worth individuals (HNWIs) are attracted to investing their money in the commercial shophouse market of Singapore due to the limited supply in this particular niche in real estate asset.
According to an expert agent who stated, “The ABSD or additional buyer’s stamp duty policy intended for the market on residential property facilitated the diversion of a much higher net worth capital leading to the commercial shophouse industry.”
“Local and foreign HNWIs are making fresh enquiries specifically interested on commercial shophouses since the announcement of the cooling measures on residential property in July of the current year.”
Foreigners’ ABSD especially those purchasing residential Singaporean properties increased from 15 per cent to 20 per cent.
From 15 per cent ABSD, companies are now paying 25 percent ABSD on residential property acquisition. Moreover, buyers must also comply with the 4% buyer’s stamp duty (BSD) aside from the ABSD.
On the contrary, shophouses with locations on fully zoned commercial sites do not have ABSD and all buyers are only required to make 3 per cent payment on BSD.
Big Bus Tours, a London-based and the largest open-top sightseeing tour operator in the world, made the acquisition for Duck & Hippo Group this year.
Disclosure of the acquisition price is not available; however, market watchers are expecting Mr. Heng to make more money and some of it he invested in the conservation shophouse market in Singapore.
The upper levels of 31 Keong Saik Road are accommodating offices while Butcher Boy restaurant leased the ground floor.
The value of the shophouse transaction now reached S$1.399 billion as of its first 11 months, according to the caveats data analysis on URA Realis by JLL.
It surpassed the previous year’s S$1.033 billion record as well as the record-breaking high of 2012, which is S$1.385 billion.
This is before the total debt servicing ration framework debuted in the latter part of June in 2013, which weakened the 2013 shophouse deals, particularly during the second half of that year.
Simon Monteiro, heritage buildings associate director of Savills Singapore, said that the increase in the shophouse prices of Districts 1 and 2 even tightened the yields despite the slow ground-floor retail, food, and beverage space rentals. However, office rents are stable.
Clemence Lee, the senior director for JLL’s capital markets in Singapore, stated, “Shophouses are still in the forefront and deemed as remarkable long-term investments, which makes the demands from family offices, HNWIs, end users, corporate, and boutique real estate funds strong.
This is due to their good location, limited supply, and strong heritage value, thus, there are more buyers than sellers.”
Lee expects Districts 1 and 2 shophouses to continuously appreciate in a gradual manner next year.
“Nevertheless, the income and yield will constrain any price increase, which properties could generate. Moderation of price increase is possible with the threats of increasing interest rates.”
The 999-year 136 Telok Ayer Street property is also on the market for S$15.5 million, which translates to S$4,500 psf, located on a built-up area.
The ground floor of the property is for food and beverage use although it is a three-storey building with an attic.