32 Shophouses for Sale at Guide Price of $138 million

A portfolio of 32 shophouses along Lavender Street and Serangoon road has been put up for sale by public tender, at a guide price of $138 million. The Lavender Collection are freehold properties, which are zoned for commercial use.

Details

An enquiry on the development baseline of one of them concluded it was high, at a plot ratio of 3.0. There are no development charges payable.

The 32 shophouses occupy a combined land area of about 49,244 sq ft. The combined gross floor area is about 79,502 sq ft. The indicative price comes out to about $1,736 psf on the gross floor area, or $934 psf ppr. 

These are commercial shophouses. Neither Additional Buyer’s Stamp Duty (ABSD) nor Seller’s Stamp Duty (SSD) is payable in the purchase (however, note that seven per cent GST is payable for commercial properties).

Besides the usual refurbishments and rental income, prospective owners may want to consider further development of the properties by constructing extensions. A six-storey rear extension at the back of the shophouses would double the portfolio’s gross floor area to 147,732 sq ft (with the approval of the relevant authorities). However, do note that since this is a conservation shophouse, there would be limited options in redesigning its front facade. 

After purchase, the new owner may sell the shophouses on an individual basis. Alternatively, they may rent them out and maintain them for long-term income and security. 

Location

Located in Jalan Besar, this collection lies in the midst of a commercial and medical hub, supported by various F&B (food and beverage) and lifestyle offerings. The collection’s location on the city fringes is tantalisingly close to the good places – however, a lack of proper or sufficient parking spaces might worry some tenants.

However, its is still a 13 minute walk from Boon Keng MRT station, a three minute walk from Bendemeer MRT station, and a 14 minute walk from Farrer Park MRT station. It is also a 10-minute drive from the central business district and Orchard Road. The area also promises easy access to the Pan Island Expressway and Central Expressway.

Most importantly, the shophouses have high visibility from the main road; with the short distance to the MRT, it can offset the parking issue.

There are many major commercial developments nearby including Aperia, Arc 380, CT Hub, Connexion and City Square Mall, which threaten to pose stiff competition for F&B businesses at the shophouses. 

 New developments in the neighbourhood are also underway, such as  Centrium Square – a 19-storey commercial development comprising retail, medical suites and office space; and Uptown@Farrer, a mixed-use development consisting of retail and residential space.

On the bright side, the Urban Redevelopment Authority has recently marked the Kallang River precinct as a key growth area. Likely future developments include the addition of new residential precincts at Kampong Bugis and the Kallang Airport area. More sporting and community facilities are anticipated as well. 

Who’s buying?

We reckon the buyers of the shophouses are likely to be companies. Individuals rarely have the kind of money it would take to purchase and redevelop it. However, for those who can afford it, this is a good investment. Conservation shophouses rarely come up for sale, and shophouses in general hold their prices very well. Not to mention, these are freehold properties, positioned to benefit greatly from future economic development of the area. While buying the set of properties is a profitable deal, we suspect not all 32 shophouses will be kept together. Expect to see a few of them for sale individually in the (relatively) near future.

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