Fragrance CEO Snaps Up Singapore Retail Site in $40M Collective Sale

The founder of local developer Fragrance Group has won a tender for an en bloc site in Singapore’s Farrer Park area with a bid of S$55.1 million ($40 million), as the former love hotel entrepreneur continues an acquisition spree stretching from his home turf to London.

James Koh entered the highest bid for the property, known as Verdun House, at a tender that closed on Tuesday, according to a statement issued by Delasa, which advised the owners on the collective sale.

The owners of 15 of the property’s 16 strata-titled units consented to the sale, representing a mandate of 93 percent of the development located 370 metres (405 yards) from Farrer Park MRT station. The commercial-zoned site measures 7,300 square feet (678 square metres) and comprises four shops and eateries on the ground level and 12 apartments at the upper levels.

“The marketing exercise for Verdun House required a differentiated approach from most typical en bloc sales which tend to be sold to property developers for their immediate redevelopment potentials,” said Delasa CEO Karamjit Singh. “While Verdun House may be redeveloped, it offered better prospects as a value-add proposition, which would see the investor sprucing up the building before refreshing the tenancies and income.”

Bargain Shopping

The 1980s-vintage property at the corner of Verdun and Sam Leong roads made a first collective sale attempt in 2018 with a reserve price of S$60 million. This time, the reduced sale price of S$55.1 million equates to S$1,793 ($1,299) per square foot of the property’s maximum commercial gross floor area of 30,727 square feet.

At the successful sale price, each apartment owner stands to receive between S$2.1 million and S$2.8 million while the owners of the shops will receive between S$5.7 million and S$7.5 million, Delasa said.

The deal follows Koh’s purchase late last year of two decades-old Singapore bungalows with redevelopment potential, according to a February report by EdgeProp.

The Fragrance boss picked up a bungalow on a 21,046 square foot leasehold site at Hillside Drive for S$19.25 million and a Good Class Bungalow on a 25,272 square foot freehold site at Lornie Road for S$24.8 million, with both transactions closing before the government’s new cooling measures took effect, EdgeProp reported.

Farther afield, Fragrance Group in December purchased a hotel in west London from British real estate fund manager Queensgate Investments for an undisclosed sum. The developer picked up the 906-room Holiday Inn London Kensington Forum hotel at 97 Cromwell Road to mark one of London’s biggest hotel deals last year, according to a Savills report.

Market Wobbles

Koh is scooping up his commercial site after Singapore saw retail prices and rents decline by 1.4 and 0.4 percent respectively on a quarterly basis in the first three months of 2022, according to Knight Frank. On a yearly basis, prices narrowed by 2.5 percent and rentals decreased by 2.9 percent.

“Business sentiments among retailers were dampened by the news of external headwinds such as the ongoing Russia-Ukraine war, lockdowns in Mainland China as well as the disrupted global supply chains, plaguing some firms with doubts on whether to risk expanding their businesses especially with rising inflation already affecting costs,” said Leonard Tay, head of research at Knight Frank Singapore.

In the residential market, new sales volume fell by 39.5 percent from the fourth quarter of 2021 to 1,825 transactions, while secondary sales volume fell 28.3 percent to 3,518 units.

“The fall in overall sale volume was mainly due to the cooling measures announced in December 2021 and the tentativeness of developers to launch new projects while the market was in a state of pause with the typical, even traditional watch-and-wait reaction that follows a cooling measure announcement,” Tay said.