Buying into Serangoon Road transformation
By Cecilia Chow
/ The Edge Property |
A rare corner shophouse on Serangoon Road has been put on the market for sale. The owner, a semi-retired businessman who wants to be known as Chan, has been holding on to the shophouse for a decade. Chan purchased the property in early 2007, and spent $200,000 refurbishing it. The ground floor is currently tenanted to a 24-hour coffee shop and there is a rental apartment in each of the three upper floors.
Chan says the existing property is “underutilised” and that it is time to sell the asset so that its potential can be maximised. The building sits on a freehold land area of 2,020.4 sq ft, and the gross floor area (GFA) is 7,111 sq ft. A covered external space of 1,443.4 sq ft is being used as a seating area for the coffee shop, as it can accommodate up to 200 people. The total site area of the property is therefore 3,463.8 sq ft.
According to Chan, the size of the site is what drew him to the corner coffee shop 10 years ago. “It’s because the land area is bigger than the other corner shophouses on Serangoon Road,” he says. “Most of the others sit on a land area of about 2,000 sq ft. Mine is more than 3,000 sq ft.”
In addition, the property met all three of his investment criteria a decade ago: It is a corner shophouse, of freehold tenure and located less than a five-minute walk to an MRT station. The shophouse at 452 Serangoon Road is located at the corner of Serangoon Road and Petain Road, and therefore just a three-minute walk to the Farrer Park MRT station.
View from the uppermost level of the shophouse at 452 Serangoon Road
Redevelopment potential
One advantage of the corner shophouse at 452 Serangoon Road is that it is not a conservation building. Chan says the shophouse was built 30 years ago and can therefore be redeveloped, unlike the adjacent shophouses. For instance, next door is 450 Serangoon Road, a conservation shophouse that is also on the market. It will be put up for auction by Colliers International on March 30.
A mortgagee sale, the shophouse at 450 Serangoon Road was last put up for auction by Colliers in November with an opening price of $5.75 million. The shophouse is vacant and sits on a 1,523 sq ft, freehold site. It is a part-two-storey and part-four-storey building. Under the secondary conservation guidelines, while the façade has to be conserved, a six-storey annex can be erected in the rear. “The two properties could be amalgamated,” says Sammi Lim, CBRE director of investment properties. “We believe, however, that 452 Serangoon is the critical plot in the event of a redevelopment, as it is a corner plot and larger in size, as well as not restricted by the conservation guidelines.” Lim is marketing the property at 452 Serangoon Road.
According to Lim, the corner shophouse offers multiple development permutations to maximise the use of the site. For instance, the property can be redeveloped into a full commercial block with a GFA of 10,392 sq ft and a plot ratio of up to 3.0, as it is zoned for commercial use under Master Plan 2014.
The existing building can also be extended to increase the floor space of the shophouse. Given its dual frontage, the ground floor is ideal as a showroom as well as for F&B space, given its existing approval, adds Lim. The GFA of the property can therefore be increased by 3,281 sq ft through additions and alterations.
There is also a possibility of redeveloping the building into a part three-storey and part five-storey mixeduse complex with residential and commercial components, according to a Written Permission granted by the authorities, and subject to further evaluation and approvals.
The new development could have an F&B outlet on the ground floor, offices on the second and third floors, and apartments on the fourth and fifth floors. Lim says the apartment on the fourth floor could be a four-bedroom unit and the one on the top floor could be a two-bedroom unit with a roof terrace.
Pickup in land sales and prices
The Serangoon neighbourhood has been gentrified over the past decade with new developments sprouting up. Chan witnessed that transformation from the vantage point of his corner shophouse on Serangoon Road. For instance, he says the opening of the URA public carpark adjacent to the popular Sri Srinivasa Perumal Temple located across the road has eased traffic congestion in the area. The conversion of Petain Road from a two-way to one-way road has also helped ease traffic flow along the street, he adds.
Chan recalls how the freehold 910-unit City Square Residences by City Developments was launched in 2005 at prices starting from $500 to $600 psf and fully sold within a few months. By 2007, units were changing hands in sub-sales at prices above $1,000 psf.
At the peak of the market in January 2015, a 570 sq ft, one-bedroom unit on the 28th floor of one of the 30-storey towers at City Square Residences changed hands for $1.088 million, or $1,907 psf. Even though the condominium project was completed eight years ago, its 570 sq ft, one-bedroom units were sold at $1,525 and $1,558 psf in January, according to caveats lodged with URA Realis.
City Square Mall, adjacent to City Square Residences and also developed by City Developments, is linked to the Farrer Park MRT station and opened in September 2009, making it a game changer for the neighbourhood, reckons Chan. This is because City Square Mall, with a total retail space of 700,000 sq ft, was said to be on a par with Ngee Ann City on Orchard Road, and there is no other shopping mall of such a scale in the vicinity.
In the area, a consortium led by Sustained Land beat 15 others to win the 65,785 sq ft residential site on Sturdee Road in the Government Land Sales programme in 2015. The consortium paid $181.2 million ($787 psf per plot ratio) for the site. The new condo project, the 305-unit Sturdee Residences, was launched last year. About 220 units (72%) have been sold, with the latest median price at $1,568 psf.
In January, Low Keng Huat won the Perumal Road site for $174.08 million ($1,007 psf ppr), beating 10 other bids. The site can be developed into a project with 200 residential units and commercial space on the first level.
“There has been a significant pickup in land sales activity in recent months,” says CBRE’s Lim. “Developers and investors are extremely eager to replenish their depleting landbank.”
Up-and-coming medical hub
Meanwhile, the area around the Farrer Park MRT station entrance on the Rangoon Road side has become a medical hub with the opening of Connexion, a complex with a hospital, medical centre, hotel and spa. Across Farrer Park Road and linked by an overhead bridge is the upcoming Farrer Square, which also comprises a mix of medical suites, the 300-room Park Hotel Farrer Park and a retail podium. Farrer Square by RB Capital is scheduled for completion this year.
Last year, Tong Eng Group launched Centrium Square, a new commercial project and redevelopment of the former Serangoon Plaza, on Serangoon Road. The new 19-storey building will be mixed-use, with 143 office units, 39 medical suites and 49 retail shops. The entire retail podium was purchased by a Bangladeshi group at an average price of $4,967 psf last year.
The latest transaction of a strata office unit at Centrium Square was that of a 10th floor, 861 sq ft unit that fetched $2.19 million ($2,548 psf) in February, according to a caveat lodged. Average prices of the strata office units in 2016 and so far in 2017 are $2,515 psf.
The indicative price for 452 Serangoon Road is $20 million, or $1,414 psf, on total proposed built-up area. CBRE’s Lim expects the property to attract the interest of contractors, developers and private-equity funds actively seeking to purchase a strategically located freehold development plot.
The corner shophouse at 452 Serangoon Road is on the market for $20 million
Artist’s impression of how the shophouse could be redeveloped
Source: Atria Architects, CBRE
“There is strong interest from investors seeking income-producing property with asset enhancement potential that will unlock further appreciation in capital values and enjoy rental upside,” adds Lim. The tender will close on May 9.
This article appeared in The Edge Property Pullout, Issue 773 (Apr 3, 2017) of The Edge Singapore.
Follow Us
Follow our channels to receive property news updates 24/7 round the clock.
EdgeProp Telegram
EdgeProp FacebookSubscribe to our newsletter
Top Articles
Search Articles