Shophouse at 21 Boon Tat Street fetches record price in District 1

Singapore

A 999-year leasehold shophouse at 21 Boon Tat Street in the Telok Ayer Conservation Area is being sold for S$16.5 million, which works out to S$4,259 per square foot on the estimated built-up area of 3,874 sq ft.

According to property agents, the psf price is a new high for a conservation shophouse in District 1.

In the past 12 months, the prices in the area have not crossed the S$4,000 psf mark.

In August, a corner shophouse at 64 Club Street, also with 999-year leasehold tenure, fetched S$3,880 psf on the estimated built-up area of 5,618 sq ft.

BT understands that 21 Boon Tat Street is being bought by an entity controlled by Duck & Hippo group founder James Heng. The homegrown group was recently acquired by London-headquartered Big Bus Tours, the world's largest operator of open-top sightseeing tours.

The official launch of Big Bus Tours in Singapore took place on Sept 3, 2018 - with the continued operations of the seven sub brands that were previously owned by the Duck & Hippo group and now under the new Big Bus Tours ownership.

The acquisition price was not disclosed.

Mr Heng, who is in his 50s, is staying on as a consultant with Big Bus Tours during the transition period, according to a media report.

The 21 Boon Tat Street purchase will mark Mr Heng's latest acquisition of conservation shophouses in Singapore. He also owns properties at Amoy Street, Teck Lim Road and Liang Seah Street.

Market watchers attribute the record psf price being paid for 21 Boon Tat Street to its prime location in the CBD as well as the property's rare permanent approval, in the locale, for food and beverage use for both levels 1 and 2.

The street level of the shophouse is leased to one-Michelin-starred restaurant Cheek by Jowl. The second and attic levels are leased to Freehouse; the bar uses the attic space as seating area.

The property, which is being sold by a seasoned property investor, occupies a land area of 1,759 sq ft and is zoned "commercial" under the Urban Redevelopment Authority's Master Plan 2014.

It is a stone's throw from Telok Ayer MRT station on the Downtown Line and a short distance from the Raffles Place interchange station.

BT understands that the price reflects a gross yield of under 2 per cent, based on the current rental income from the two tenants. JLL marketed the property through an expression of interest exercise that closed on Sept 20.

Another recent shophouse transaction is 22 Ann Siang Road, which has fetched S$15 million. This works out to S$3,488 psf based on the estimated built-up area of 4,300 sq ft according to Loyalle Chin of PropNex Realty, who brokered the sale. The buyer is a Singaporean high net worth individual, he said, declining to elaborate.

The 999-year leasehold property will be near the upcoming Maxwell station under the Thomson-East Coast Line. The shophouse has three storeys and a basement. Restaurant Lolla occupies the ground floor and basement while the upper levels are leased as offices.

Based on existing leases, the gross yield is about 1.5 per cent.

While some property agents and shophouse owners are excited about the bullish prices being achieved in the area, particularly for 21 Boon Tat Street, some seasoned shophouse buyers lament that yields are being pushed to extremely low levels.

"Interest rates are rising and F&B rents are at best holding. It does not make sense to buy at these levels in the hope of further price appreciation," said an institutional buyer.

Meanwhile, all eyes are on a corner shophouse block at 1 Stanley Street and 2 and 3 McCallum Street, being marketed through an expression of interest exercise that closes on Oct 10.

The price tag is S$48 million, which works out to S$4,442 psf on the estimated built-up area of 10,805 sq ft. The property is owned by Lian Huat Group. Spanning three storeys and an attic, the building is fully leased. The ground floor is occupied by 7-Eleven and a restaurant, while the upper floor are leased to offices; the gross yield is about 1.5 per cent .

The property is being jointly marketed by CBRE, Cushman & Wakefield and Corporate Visions, a boutique commercial property agency.