Freehold commercial building at 143 East Coast Road for $23.5 mil

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The five-storey building at 143 East Coast Road that is on the market for $23.5 million (Credit: PropNex)

SINGAPORE (EDGEPROP) – The reopening of i12 Katong mall last December after a two-year revamp is the latest catalyst in the rejuvenation of the East Coast Road and Joo Chiat area. New F&B outlets in the six-storey mall include PS Café, Privé Katong and Janice Wong Singapore by the award-winning pastry chef. The mall sees new retailers including athletic apparel retailer Lululemon and premium lifestyle centre Core Collective, as well as the return of anchor tenants Golden Village, Wine Connection and Cold Storage’s CS Fresh.

New bistros and cafes in shophouses that have sprouted in the area include Chin Mee Chin Confectionery (reopened last September, after closing in 2018), the new Neptune café and Common Man Coffee Roasters, as well as the upcoming Plain Vanilla. “The Katong area is being gentrified into the ‘Holland Village of the East’,” says Loyalle Chin, associate group division director at PropNex Realty.

New cafes at i12 Katong include PS Café, Privé Katong and Janice Wong Singapore by the award-winning pastry chef (Photo: Samuel Isaac Chua/EdgeProp SIngapore)

The East Coast area has traditionally been popular, and now, is even more so. “With CBD shophouses at record prices, some savvy buyers (both local and foreign) have turned to more affordable alternatives in the suburbs,” notes PropNex’s Chin. “We see more demand from Singaporean groups in the East Coast area, as well as family offices and private equity real estate funds that are seeking commercial assets.”

Sizeable deals

The increase in demand has driven up prices of shophouses and commercial spaces in the Katong neighbourhood. Significant deals involving several shophouses in a row include the sale of three consecutive shophouses at 372, 374 and 376 Tanjong Katong Road that changed hands for $18.2 million last November.

A row of nine freehold shophouses at 30 to 46 Joo Chiat Place fetched $31.8 million last December (Credit: Huttons Asia)

A row of nine freehold shophouses at 30 to 46 Joo Chiat Place fetched $31.8 million last December. The deal was brokered jointly by Rudy Tedja, associate group district director at Huttons Asia, and Simon Monteiro, senior associate marketing director of List Sotheby’s International Realty. A new five-storey annex block can be built behind the conserved shophouses.

PropNex’s Chin expects the latest round of cooling measures unveiled last December and the Budget 2022 announcement on Feb 18, which saw property taxes hiked for high-end homes, to divert some of the wealth from the landed property and Good Class Bungalow segment to shophouses and boutique commercial buildings. “These have proven to be attractive alternative legacy assets,” he says. Furthermore, investors with a budget of $8 million or more have switched to shophouses instead of landed homes as investment properties, he adds. (Check all latest Singapore property Market Trends)

The property at 143 East Coast Road has been leased to 5 Steps Academy, an international school (Credit: PropNex)

On the market is a five-storey building at 143 East Coast Road, located opposite i12 Katong, with PropNex’s Chin as the exclusive marketing agent. This freehold building had undergone extensive addition and alteration works three years ago, which were completed in 2018. The building has a total built-up area of 10,000 sq ft. Besides the front entrance along East Coast Road, the building has a rear entrance with a drop-off point and four parking spaces.

The property at 143 East Coast Road has been leased to 5 Steps Academy, an international school approved by US College Board and Cambridge International School for SAT and IGCSE A-level examinations. It is for sale at $23.5 million ($2,350 psf) by expressions of interest (EOI), which closed on March 3. It has been leased at a monthly rental rate of $45,000, which translates to a gross rental yield of 2.3%. This is considered attractive as most gross rental yields of such commercial properties are 2% or lower today, says Chin. “It presents an attractive opportunity for investors seeking full commercial assets at East Coast Road, which have seen scarce supply and high demand. Negotiations are ongoing and there have been a few offers.” The property is within walking distance of the upcoming Marine Parade MRT Station on the Thomson-East Coast Line.

The single-storey shophouse (pictured, extreme right) is one of two at 124 and 126 East Coast Road that changed hands for $17.28 million in Aug 2019 and can be redeveloped into a commercial building (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Nearby, a pair of freehold shophouses at 124 and 126 East Coast Road changed hands for $17.28 million in August 2019, according to a caveat lodged with URA Realis. Yap Hui Yee, senior director of investment sales and capital markets at Savills Singapore, brokered the sale. The property, which is a corner plot sitting on a freehold site of 2,872 sq ft, is just across the road from i12 Katong and has approval for F&B use.

Not being a conserved property, the shophouses at 124 and 126 East Coast Road could be redeveloped into a modern, multi-storey commercial building, given that it has been zoned for commercial use under the 2019 Draft Master Plan. With a plot ratio of 3.0, the existing single-storey shophouses can be redeveloped into a new five-storey building with a maximum gross floor area (GFA) of 8,616 sq ft. Hence, the transacted price of $17.28 million translates to $2,006 psf based on GFA. The site has yet to be redeveloped.

The shophouse at 183 East Coast Road was sold for $6.45 million last September (Credit: PropNex)

Stiffer competition for assets

Further down the road, the shophouse at 183 East Coast Road was sold for $6.45 million last September. The freehold shophouse sits on a land area of 1,862 sq ft, with a built-up area of 2,800 to 3,000 sq ft. The deal was brokered by PropNex.

With competition for shophouses in the East Coast having intensified, interest has also shifted to commercial buildings and strata commercial spaces. On the market are two adjacent strata retail units on the ground floor of EastGate commercial building next to Katong Plaza. The two 999-year leasehold retail units are currently fully leased: one is a 5,145 sq ft unit leased to Sri Murugan Indian supermarket, while the other is a 1,313 sq ft unit leased to Fresenius Kidney Care dialysis clinic. (Find Singapore commercial properties with our commercial directory)

The two units, with a total strata area of 6,458 sq ft, are for sale by EOI and marketed by Savills’ Yap. The asking price is $23.8 million, which translates to $3,685 psf. The EOI will close on March 28.

“The strata retail market has seen the highest sales transaction volume since 2017,” she says. According to Savills, 280 strata retail units changed hands for a total of $496.5 million last year.

The Starbucks in the conserved building that was formerly the Joo Chiat Police Station and is now part of Katong Square (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Yap attributes this to changes in consumer demand and work-from-home arrangements, which led to the resilience of strata retail units in established residential enclaves during the pandemic. “Many investors have therefore shifted their focus to retail shops situated within mature neighbourhoods,” she adds.

“With liquidity at an all-time high, investor interest — especially from family offices and private equity real estate funds — has shifted towards commercial assets with attractive yields,” says PropNex’s Chin.

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