8M Real Estate buying shophouses worth S$144m

By Kalpana Rashiwala, Business Ti / 20-Feb-2019

Citi Commercial Pte Ltd

8M Real Estate is buying about S$144 million in shophouses in four transactions involving 10 shophouses in Tanjong Pagar Road, Amoy Street, Gemmill Lane and Lorong Mambong.

The biggest of the four deals, at S$80 million, is for a row of six shophouses – Nos 33, 35, 37, 39, 41 and 43 Tanjong Pagar Road – which have four floors and a mezzanine level.

The ground-floor space of two of the shophouses is leased to a bridal boutique; that for another two shophouses leased to Five Oars Coffee Roasters, and that for the last two shophouses to The Proof Collective, which uses the space as its offices and also operates a cocktail bar at the back.

The upper levels of the six shophouses are vacant, but the Urban Redevelopment Authority has approved a change of use to hotel, said Ashish Manchharam, managing director of 8M Real Estate, when contacted by The Business Times. The hotel will be operated by his hospitality management and operations arm, 8M Collective.

The S$80 million being paid for the six shophouses works out to around S$2,600 per square foot based on a built-up area of about 30,800 sq ft.

The shophouses stand on land with a 99-year leasehold tenure that started in December 1994, which leaves nearly 75 years on the lease.

The shophouses are being sold by Arcc Holdings, controlled by Tony Chen.

They are at the end of a block of shophouses; back in 2016, 8M Real Estate bought Nos 15, 17, 19, 21 and 23, which are on the other end of this block, for S$2,166 psf.

Over at Amoy Street, the company is acquiring Nos 87 and 88 from SP Tao’s vehicle Shing Kwan, for about S$39 million. The two units, which have a total gross floor area of 14,641 sq ft, are on land with nearly 71 years left on the lease.

The shophouse pair has four levels. The ground floor space of both units is leased to UFIT; the upper levels are occupied by office tenants. Based on the current rental income, the gross yield is about 3 per cent. The deal was brokered by CBRE.

8M Real Estate plans to seek URA approval to change the ground-floor use to F&B (food and beverage), and refurbish the shophouses when the tenancy leases expire over the course of the next 12 months.

No. 5 Gemmill Lane, on a site with about 79 years left on the lease, has been bought for S$16 million. 8M Real Estate plans to renovate this property, which is vacant, and find tenants.

The ground floor is approved for F&B use. The acquisition, completed late last year, expands 8M Real Estate’s presence along Gemmill Lane.

The 10th shophouse 8M Real Estate is buying, No. 48 Lorong Mambong in Holland Village, has an S$8.3 million price tag. The entire two-storey freehold property is tenanted to a Japanese restaurant; the gross yield is nearly 3 per cent.

The transaction was brokered by Richard Jany Real Estate and Simon Monteiro of Savills Singapore.

The property is just across the road from the mixed development on Holland Road being built by a consortium led by Far East Organization on a site clinched at a state tender for S$1.2 billion last year. Mr Manchharam said: “We are banking on this development, when it has been completed, to bring in more people to the area. We are long-term investors.”