Fortuna Hotel to be sold for nearly S$86 million

TCRE Partners said to be teaming up with JMD Holdings for purchase of freehold property near Farrer Park MRT station; price works out to S$809,000 per room

Apr 28, 2022

FORTUNA Hotel, a 7-storey freehold property at the corner of Serangoon Road and Owen Road, near Farrer Park MRT station, is expected to change hands soon at S$85.8 million.

The price works out to around S$809,000 per room.

The Business Times understands that the 106-room hotel is being bought by an entity equally owned by JMD Holdings and an associate of TCRE Partners.

JMD Holdings is owned by 3 members of the Wang family - the paternal relatives of Charles and Keith Wong, the founders of the Charles & Keith fashion label.

TCRE Partners, a real estate investment and management outfit set up in 2017, is owned by the family of co-founder Nicholas Yeo.

The hotel is being sold by an entity of the Chng family that also owns the Fortuna Hotel in Hanoi.

Fortuna Hotel in Singapore currently caters to longer-term staying guests from Malaysia as well as some local residents. The hotel has a restaurant and a few retail units on the first storey, and a basement carpark.

The property’s existing gross floor area of 47,990 sq ft is 5.76 times the 8,332 sq ft total land area (comprising 2 land lots). This exceeds the 3.0 gross plot ratio - the ratio of maximum gross floor area (GFA) to site area - for the site, which is zoned for hotel use, under the Urban Redevelopment Authority’s Master Plan 2019.

Fortuna Hotel could potentially be redeveloped up to the existing GFA.

While there is no untapped GFA, there is potential to extract greater value from the asset by increasing the number of rooms.

Fortuna Hotel’s 106 rooms range from 183 sq ft to 527 sq ft. The average room size of 280 sq ft is considered to be relatively large for a mid-tier hotel, and this presents an opportunity for the incoming owners to carve out more rooms, say market watchers. One possibility would be to have loft rooms and reposition the hotel as a hip boutique property.

By some estimates, it could cost about S$25 million to build a new hotel on the site.

The site on which Fortuna Hotel stands used to house Hotel New World, which collapsed in 1986 due to structural defects and poor quality construction. The site was sold for S$4 million to construction and property group HCA Holdings, which invested a further S$9 million to build the new hotel on the site, according to earlier media reports.

HCA sold the property for S$18.5 million to the Chng family in 1993 prior to its opening the following year. In 2005, the Chng family bought the adjacent state land on a freehold basis and completed an extension to the hotel in 2010.

A repositioning of Fortuna Hotel will contribute to the continuing gentrification of the Farrer Park locale, note analysts.

A stone’s throw from the hotel, an entity linked to Satinder Garcha bought The Claremont Hotel in 2019 at S$68 million (or about S$755,000 per room). The property is being spruced up and could potentially be rebranded.

Nearby, City Developments and MCL Land are developing Piccadilly Grand, a residential project with commercial space on the first storey.

The government earlier this week announced plans for the redevelopment of a 10-hectare site at Farrer Park into a public housing estate with around 1,600 HDB flats, integrated with sports and recreational facilities.

TCRE Partners has a minority stake in a consortium led by US-based private equity group Angelo Gordon that bought Bugis Junction Towers for S$547.5 million in late-2019.

Word on the street is that having nearly completed a S$10 million refurbishment of this property, the consortium has put the asset, with a net lettable area of nearly 249,000 sq ft, on the market. Cushman & Wakefield has been appointed to find a buyer through private treaty.

https://www.businesstimes.com.sg/rea...ly-s86-million