This block of Serangoon shophouses can be converted into a six-storey building. (Source: PropNex Realty)
A union affiliated with Singapore’s National Trades Union Congress (NTUC) has purchased a block of six shophouses along Serangoon Road for S$62.5 million ($47.65 million), according to public records seen by Mingtiandi.
The row of two-storey freehold properties at 322-332 Serangoon Road near Farrer Park MRT Station can be redeveloped into a six-storey commercial building that can yield up to 27,125 square feet in gross floor area, according to a press release from PropNex Realty on Thursday, which managed the tender of the properties.
PropNex did not identify the buyer and the seller but official documents showed the Singapore Maritime Officers’ Union (SMOU), an NTUC-affiliated union of merchant marine officers, lodged a caveat with the Singapore Land Authority on 19 January declaring its ownership of the asset. Market sources identified the seller as a local family which has owned the assets for an extended period.
“We received a number of enquiries for this portfolio of freehold shophouses from investors, including high net worth individuals and family offices,” Tracy Goh, head of investment and collective sales at the property agency, said in the press release. “They are attracted to the properties’ prominent location in the city fringe as well as proximity to various amenities and being opposite the Farrer Park MRT station.”
NTUC Deal Flurry
The shophouses are currently 100 percent occupied and are generating stable rental income, with ground floor units leased to food and beverage operators and the second floor filled by an Indian music lounge.
Tracy Goh of PropNex
“These shophouses are not under conservation and the buyer can choose to redevelop them in the future to unlock greater value from the potential increase in GFA,” Goh said.
Located at the fringe of Singapore’s urban core at the junction of Serangoon and Kitchener Roads, the block of shophouses sits adjacent to developer Tong Eng Group’s Centrium Square commercial complex and opposite City Developments Ltd’s City Square Mall.
SMOU paid around S$2,304 per square foot of maximum allowable built area for the assets, which is around one percent less than the seller’s initial asking price of S$63 million, or S$2,322 per square foot, declared in August, at the start of a tender exercise which ended in September.
Official documents showed the caveat for the property was lodged by SMOU trustees Robin Foo, Tan Hung Tat and Jennifer Tan Hwee Kheng. The merchant marine officers’ organisation is among 58 NTUC affiliated unions, a national confederation of Singapore labour groups which operates 12 business units, including its insurance division, Income Insurance and its real estate investment management arm, Mercatus Co-operative Ltd.
Mingtiandi reached out to SMOU for comment but had not received a response by the time of publication.
SMOU’s acquisition adds to a string of real estate transactions involving NTUC and its affiliates over the past year, including Income’s appointment of CBRE Investment Management to manage its $3 billion property portfolio, which was announced just two weeks ago.
Last month, Mercatus agreed to sell two suburban retail assets to Hong Kong’s Link REIT for S$2.16 billion, disposing of Jurong Point shopping centre and Swing By @ Thomson Plaza, a section of the Thomson Plaza mall, that accounted for half of its S$4 billion mall portfolio.
Optimism in a Declining Market
With the Serangoon sale now closed, Goh expects Singapore’s commercial real estate, particularly assets near commercial districts and tourist attractions, to remain attractive investment targets with the retail-dominated sector set to benefit from the post-pandemic rebound.
“As more people return to their workplaces and as tourism picks up, this could translate to more demand for F&B and retail services, which will then benefit commercial property owners and landlords,” she said.
That optimism contrasts with a report released by Knight Frank on Wednesday which shows that the value of shophouses sold across the city-state fell by around 16 percent from 2021’s total of S$1.9 billion to reach just S$1.6 billion last year. The quantity of shophouses sold also declined from 244 in 2021 to 187 properties last year.
Knight Frank expects shophouse transaction volumes to drop further this year as investors grow more cautious, projecting sales to range from S$1.3 billion to S$1.5 billion in 2023.
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