How do we sell you the idea of buying four burned-down shophouses in Geylang? Do we just say the property really lets in the natural light? That it’s well ventilated? Well-done? In any case, this is one of heck of a fire sale:
Four burnt shophouses are on sale for $14 million in Geylang
These shophouses have a total land area of 5,113 square feet, and are zoned for commercial use. With a plot ration of 3.0, you’d be looking at a sizeable gross floor area of about 15,340 square feet. The shophouse are in Lorong 33 (a fair distance away from the red light area), between Sims Avenue and Geylang Road.
In terms of accessibility, it’s about equidistant between Paya Lebar and Aljunied MRT stations – but both are quite a distance; we’d estimate the walk was about 15 minutes either way.
There is no Additional Buyers Stamp Duty (ABSD) or Goods and Services Tax (GST). Also, foreigners and entities can buy these freehold properties.
As an important aside, the fire happened in March this year. NOBODY DIED. No one suffered so much as a burnt arm hair. So don’t worry about ghosts, worry about fire safety regulations instead (the last owners clearly didn’t). Don’t mistake this for the fire in 2014, when there were fatalities (that was somewhere else in Geylang).
Is the price fair?
We had differing opinions over the value of the shophouses; but the some real estate agents we spoke to placed the value of the four units at as high as $20 million.
But according to contractors we spoke to, restoration work for just one of the shophouses could cost between $1.2 million to $1.5 million. This could amount to much more, depending on the extent of fire damage.
For investors with the deep pockets to restore them though this is a rare chance to get a shophouse at an usually low price.
The key concerns for investors are:
- The inability to get tenants until restoration is complete. Contractors said this could take as long as 12 to 18 months, depending on whether further complications arise.
- Restoration costs are high, and can be unpredictable.
- Remember that the units are strictly commercial; no renting to living quarters to foreign workers, etc. Previous tenants in these shophouses included a furniture retailer and tyre shop; that’s the kind of tenants the future landlords should expect to work with.
- Prospective F&B tenants may be put off by the limited parking – a longstanding problem for eateries throughout Geylang, not just in this area.
We don’t expect the shophouses to remain vacant for long
Despite the issues involved with the properties (i.e. looking like the inside of a cheap amateur baker’s oven), Geylang is quite a property hotspot. A freehold location that’s about a six minute drive from the CBD won’t be ignored. In addition, shophouses have scarcity value, even – or perhaps especially – in a colourful area like Geylang.
As such, we’re certain plenty of investors are already doing the maths and calling their agents right now; prospective buyers should expect some competition.
Would you buy the burnt shophouses? Voice your thoughts in our comments section or on our Facebook community page.
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