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01-04-15, 15:57
http://www.straitstimes.com/archive/wednesday/premium/top-the-news/story/upper-circular-area-shophouse-sold-record-172m-20150325
Upper Circular area shophouse sold for record $17.2m
Seller bought site for $5.7m in 2011 and is said to have renovated it
Published on Mar 25, 2015 2:40 AM
By Rennie Whang
A HONGKONG Street shophouse sold for about $17.21 million earlier this month, a record for the Upper Circular Road Conservation Area.
The seller - believed to be Mr Ng Siew Wan, president of Guangdong Import and Export - had bought the roughly 2,159 sq ft site in January 2011 for $5.7 million, according to caveats lodged.
He is understood to have renovated the premises, taking advantage of the site's plot ratio of 4.2 to add two storeys to the rear portion of the original four-storey building. Mr Ng also topped up the lease, which previously had a 99-year tenure starting in 1951. The 99-year lease now runs from 2013. The buyer is believed to be a Singaporean.
Based on a gross floor area of about 9,060 sq ft, the price of about $1,899 per sq ft (psf) is fair, said Historical Land director Simon Monteiro. "Shophouses on a 99-year lease are now $2,000 psf on average, while those on 999-year leases or freehold are $2,200 to $2,300 psf," he said.
Mr Ng has been using the ground floor of the shophouse for his business while some of the upper floors are believed to be tenanted.
PropNex realtor Richard Tan noted that the Upper Circular Road Conservation Area is the only shophouse area in the Central Business District (CBD) under secondary conservation rules.
This means additional storeys may be added subject to zoning controls, said Mr Tan, who is co-founder of Up Academy, which trains agents in commercial properties.
Other CBD areas with shophouses - including Telok Ayer and Tanjong Pagar in Chinatown, and Boat Quay - are considered historic districts where entire buildings must be retained and restored.
"While many units in the (Upper Circular Road Conservation) area have just slightly over 30 years left on their leases, these can be topped up. There are also many three-storey buildings that could be increased to six storeys," Mr Tan said.
The same is happening in the Jalan Besar Conservation Area - just outside the Little India historic district - where shophouses can have new extensions of up to six storeys, he added.
Shophouses have seen a surge in investor attention in recent times.
Just last month, a pair in Pagoda Street sold for $20 million in total, or about $3,500 psf on a gross floor area basis, one of the highest prices for districts one and two.
The median price of shophouses has risen from $1,455 psf in the fourth quarter of 2009 to a record high of $3,772 psf in the fourth quarter of last year, a recent Colliers report noted.
Median rents have also risen over the last five years, said Ms Chia Siew Chuin, director of research and advisory at Colliers.
Quarterly median rents generally remained below $4 psf per month before 2012, but they hit a record $5.42 psf per month in the fourth quarter of last year.
Ms Chia warned that yields have fallen as rent growth has lagged behind the rapid rise in capital values. "Presently, the typical net yields for freehold shophouses are in the region of 2.5 per cent to 3 per cent; for shophouses with leasehold tenures, the average yields are generally about 3.5 per cent."
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Upper Circular area shophouse sold for record $17.2m
Seller bought site for $5.7m in 2011 and is said to have renovated it
Published on Mar 25, 2015 2:40 AM
By Rennie Whang
A HONGKONG Street shophouse sold for about $17.21 million earlier this month, a record for the Upper Circular Road Conservation Area.
The seller - believed to be Mr Ng Siew Wan, president of Guangdong Import and Export - had bought the roughly 2,159 sq ft site in January 2011 for $5.7 million, according to caveats lodged.
He is understood to have renovated the premises, taking advantage of the site's plot ratio of 4.2 to add two storeys to the rear portion of the original four-storey building. Mr Ng also topped up the lease, which previously had a 99-year tenure starting in 1951. The 99-year lease now runs from 2013. The buyer is believed to be a Singaporean.
Based on a gross floor area of about 9,060 sq ft, the price of about $1,899 per sq ft (psf) is fair, said Historical Land director Simon Monteiro. "Shophouses on a 99-year lease are now $2,000 psf on average, while those on 999-year leases or freehold are $2,200 to $2,300 psf," he said.
Mr Ng has been using the ground floor of the shophouse for his business while some of the upper floors are believed to be tenanted.
PropNex realtor Richard Tan noted that the Upper Circular Road Conservation Area is the only shophouse area in the Central Business District (CBD) under secondary conservation rules.
This means additional storeys may be added subject to zoning controls, said Mr Tan, who is co-founder of Up Academy, which trains agents in commercial properties.
Other CBD areas with shophouses - including Telok Ayer and Tanjong Pagar in Chinatown, and Boat Quay - are considered historic districts where entire buildings must be retained and restored.
"While many units in the (Upper Circular Road Conservation) area have just slightly over 30 years left on their leases, these can be topped up. There are also many three-storey buildings that could be increased to six storeys," Mr Tan said.
The same is happening in the Jalan Besar Conservation Area - just outside the Little India historic district - where shophouses can have new extensions of up to six storeys, he added.
Shophouses have seen a surge in investor attention in recent times.
Just last month, a pair in Pagoda Street sold for $20 million in total, or about $3,500 psf on a gross floor area basis, one of the highest prices for districts one and two.
The median price of shophouses has risen from $1,455 psf in the fourth quarter of 2009 to a record high of $3,772 psf in the fourth quarter of last year, a recent Colliers report noted.
Median rents have also risen over the last five years, said Ms Chia Siew Chuin, director of research and advisory at Colliers.
Quarterly median rents generally remained below $4 psf per month before 2012, but they hit a record $5.42 psf per month in the fourth quarter of last year.
Ms Chia warned that yields have fallen as rent growth has lagged behind the rapid rise in capital values. "Presently, the typical net yields for freehold shophouses are in the region of 2.5 per cent to 3 per cent; for shophouses with leasehold tenures, the average yields are generally about 3.5 per cent."
[email protected]