Shop Portfolio on the Market for $43M as Singapore Retail Rebounds

A set of retail shops in one of the oldest shopping centres in downtown Singapore is on the market for S$60 million ($42.65 million) as the neighbourhood gets a lift from nearby rejuvenation projects like CapitaLand’s Funan mall.

Four strata retail units spanning 16,038 square feet (1,490 square metres) at Peninsula Plaza, a 999-year leasehold commercial complex at 111 North Bridge Road were launched for sale via tender on Wednesday, its sole marketing agent PropNex announced.

“This is an ideal opportunity for investors who are looking to enjoy passive rental income and continued capital appreciation,” said Tracy Goh, the property agency’s head of investment and collective sales. With Singapore having added additional buyers stamp duty (ABSD) to residential purchases in a bid to cool the housing market in December, commercial assets have become a prime target for speculators.

The marketing exercise comes as CapitaLand’s reopening of the Funan mall after a S$560 million makeover adds “vibrancy” to the downtown neighbourhood and Singapore starts to enjoy a rebound in tourism and other shopping following the relaxation of pandemic restrictions last quarter.

$100M Monthly Rental Income

The seller, which PropNex declined to identify, is asking around S$3,750 per square foot for the portfolio, which is currently fully occupied by what it called long-term tenants in the restaurant and public entertainment businesses.

The four shops generate a gross rental yield of around three percent or about S$150,000 per month, according to the agency.

Known as Singapore’s “Little Myanmar,” the 1980-vintage Peninsula Plaza spans around 539,200 square feet in total floor area composed of 350 shops across the five-storey retail podium which is topped by 25 office floors.

“We believe the portfolio will continue to enjoy good leasing prospects in the future as the space is sought after by tenants in the F&B and public entertainment trade,” Goh said. PropNex is projecting prices of strata commercial space in Singapore’s central region will “remain firm” given their limited supply.

Located at the junction of Coleman street and North bridge road opposite the City Hall MRT station, Peninsula Plaza sits across from the Peninsula Shopping Complex at 3-5 Coleman Street, a 1970s vintage integrated complex which includes the four-star Peninsula Excelsior Hotel.

Other nearby projects include Capitol Singapore, which Perennial Holdings recently redeveloped into a combined residential, hotel and retail complex, as well as CapitaLand’s Raffles City.

Retail, A Long Road To Recovery

In addition to the opportunity to catch a post-pandemic bounce, Alan Cheong, head of research and consultancy at Savills Singapore, says investors are drawn to retail assets due to the strong fundamentals of the property market in general and the opportunity to buy a downtrodden market segment.

“There is a disconnect today between underlying fundamentals and the motivation for investing,” said Cheong. “For retailers, there is still a long and winding road ahead to recovery. However, that would not detract certain investors who in this present day and age are driven more by their preference to park their largesse in physical property over other assets or in financial institutions. “

418,300 visitors entered Singapore ini May after the country reopened its international borders one month earlier. That inflow was up 2,848 percent from a year earlier, although still far below the 1.5 million visitors who passed through the city in May 2019. Government data shows that Singapore retail sales also jumped 17.8 percent in May from a year earlier, rising at a faster pace than April’s 12.1 percent increase.

With retail on the rise, a number of shopping assets have changed hands in recent weeks.

SGX-listed tile supplier Hafary Holdings said on Tuesday that it is in the process of buying a row of 11 shophouses at 161 Lavender Street for S$71.28 million where it plans to set up its new flagship store.

Another successful deal recently was Fragrance Group founder James Koh’s S$55 million purchase of the Verdun House retail complex in Farrer Park during April.

A report this week from property agency Edmund Tie showed an ongoing recovery in Singapore’s retail real estate market in the second quarter, with rents rising in all three submarkets across the city-state.

“With Singapore moving ahead with greater easing of both pandemic and border restrictions, the retail climate is absolutely brightening,” said Lam Chern Woon, senior director of research and consulting at the property agency.