Loyalle Chin on investing in shophouses and the new rich

By Valerie Kor

/ EdgeProp Singapore |

May 13, 2021 6:00 AM SGT

SINGAPORE (EDGEPROP) - Loyalle Chin, senior associate division director at PropNex Realty, is a familiar figure in the CBD area, as he walks around the streets, wheeling his luggage bag. It is his mobile office as it contains documents such as options and sale & purchase agreements. An avid reader, he also brings along books, his current read being The Richest Man Who Ever Lived: King Solomon’s Secrets to Success, Wealth, and Happiness.

Chin is one of the few real-estate agents who neither drive nor feel the need to own a car. “It’s hard to find parking in the CBD, and time is money,” says Chin, who is happy getting a lift from his clients or booking a private car when needed. “When bringing regional clients for a shophouse viewing tour, I will arrange for a limousine service. It’s during these rides that I can listen to them and build relationships,” he adds.

With nine years of experience in the property market, Chin has carved a niche for himself in commercial real estate. He has transacted over $420 million worth of shophouses, hotels and landed homes to date. In 2019, Chin clocked in $3 million in agency commissions over 12 months, earning him the Champion Individual Producer Award at PropNex’s Annual Convention based on total commission received, as well as the Champion Platinum Achiever Award for clocking in the most commission per month for seven months out of 12.

Chin decided to become a real-estate agent upon the suggestion of a mentor, who felt that he was industrious and had the aptitude for it, he says. He had always wanted to be an entrepreneur, like his parents who owned a creative agency. “During my primary school days, I remember spending long hours in my parents’ office, observing how they provided services to their China-speaking clients,” he says.

In August 2018, Chin sold Wangz Hotel for $46 million, which is his largest deal to date (Photo: PropNex Realty)

He obtained his realtor’s licence in 2012, when the residential property market was peaking. Between 2011 and 2013, the government imposed a series of property-cooling measures: an increase in additional buyer’s stamp duty (ABSD) and seller’s stamp duty, as well as a lower borrowing limit for home buyers, especially those who bought two or more properties.

Chin decided to focus on commercial real estate, particularly shophouses, as many investors switched to commercial property during that period to avoid government cooling measures in the residential sector. “Investors were looking for alternative asset classes to grow their wealth, so I thought of filling in the gap,” he says. “With commercial real estate, I could also work a 5½-day week to maintain quality time with my family and community.”

To build a track record in the commercial sector, Chin says he worked “gruelling hours” during the first two years, serving clients across a wide spectrum of real estate needs — from offices, restaurants, budget hotels to even backpackers’ hostels. It was not until 2017 that he finally transacted his first CBD shophouse: the sale of a three-storey conservation shophouse on Amoy Street that changed hands for close to $20 million.

While his specialisation is currently in shophouses, Chin also deals with other asset classes as his clients may require him to broker sales and purchases of other properties. The largest deal that he has ever concluded was the sale of Wangz Hotel to TCRE Partners for $46 million in August 2018. The boutique hotel at Outram Park has 41 rooms.

Nassim-Park-Residences - EDGEPROP SINGAPORE

The most recent deal Chin concluded was the transaction of a 4,822 sq ft unit at Nassim Park Residences (Photo: PropNex Realty)

The most recent deal that Chin did was of a 4,822 sq ft unit at Nassim Park Residences, which changed hands for $13.68 million, or $2,837 psf.

Coveted CBD shophouses

In Singapore, there are about 6,500 conservation shophouses. Some are zoned for commercial use on the first level and residential use on the upper floors, while others are wholly residential, for instance, the shophouses along Cairnhill Road and at Emerald Hill Road. In the CBD, there are only 2,000 conservation shophouses, and many are zoned for commercial use, estimates Chin.

As these shophouses were built in the pre-war era, they are gazetted for conservation by URA. They typically have two or three storeys and a sheltered five-foot pedestrian pathway.

“Given their rarity, the shophouses are sought after by ultra-high-net-worth investors who consider them as rare as Good Class Bungalows in Singapore,” says Chin. Wealthy foreigners have been zooming in on conservation shophouses that are zoned for commercial use, as they would not be subject to ABSD, he adds.

Those with budgets of $20 million and more will still gravitate towards shophouses in the CBD area, as they are seeking long-term capital gains, observes Chin. These include foreign venture capitalists, private equity players and family offices who have been putting down roots in Singapore and are looking to acquire assets.

Specifically, there has been a surge in demand from Indonesian family offices for conservation shophouses in recent months, according to Chin.

“There is a limited supply of shophouses in the CBD, which will always have an appeal to investors and business owners,” Chin notes. “Once new residential properties like One Bernam at Tanjong Pagar, as well as The M and Midtown Modern at Bugis, are built, they will rejuvenate the city centre.”

With Singapore being ranked as one of the safest places to be in during the ongoing pandemic, Chin believes that affluent foreigners are looking to purchase and hold shophouses as long-term investments to hedge against inflation.

Investing in city-fringe shophouses

For first-time commercial investors, Chin believes that areas with the most potential for capital appreciation would be those at the city fringe. “City-fringe shophouses are more affordable in terms of quantum and psf pricing,” he reasons. “The gentrification of city-fringe shophouse districts and the increase in residential population in areas such as Lavender and East Coast have also piqued investors’ interest in acquiring commercial properties there. These shophouses are closer to residential enclaves and some enjoy high visibility along the main roads.”

35 Tyrwhitt Road is a four-storey shophouse that Chin is currently marketing at a guide price of $7.8 million (Photo: PropNex Realty)

The rise of e-commerce has also increased the appeal of city-fringe shophouses, as retailers and restaurateurs can achieve last-mile delivery by being positioned closer to residential areas.

More recently, Chin has been marketing a few shophouses at the city fringe. Launched at the end of April, these included 53 Lavender Street, a corner four-storey shophouse sitting on a land plot that measures 2,083 sq ft with a guide price of $9.5 million ($1,477 psf on approximate built-up area); as well as 35 Tyrwhitt Road, a four-storey shophouse with a guide price of $7.8 million ($1,378 psf on approximate built-up area).

These are the shophouses that will be located in close proximity to Kampong Bugis, an 8.29ha site located next to the Kallang Basin that is envisioned to be a new sustainable waterfront residential precinct in URA Master Plan 2019.

Additionally, in the east, Chin is marketing a single-storey building located at 8 Lorong 22 Geylang that sits on a land plot of 1,655 sq ft. It has been approved by the URA to be redeveloped into a commercial or institutional development with five storeys and a roof terrace. The guide price of $7 million translates to $1,511 psf per plot ratio on the maximum gross floor area.

In his own investment portfolio, Chin currently has a few commercial properties and also recently purchased a semi-detached house in District 15 with his wife for their own stay.

‘New rich’

Besides private equity firms and family offices, there is a new group of property buyers: they are the wealthy young technopreneurs in their mid-20s to mid-30s, who have earned money through investing in cryptocurrencies, online gaming and non-fungible tokens. They are using their new-found wealth to buy property, converting their crypto gains into real assets. Most are purchasing residential property or conservation shophouses.

“There has been a wave of family offices and ultra-high-net-worth individuals who made their millions in blockchain development and trading — both locals and foreigners,” says Chin.

Pointing to the fact that even traditional banks such as DBS are entering the digital cryptocurrency market, “it’s a trend that cannot be ignored”, he adds. This is despite cryptocurrencies’ negative reputation due to the number of frauds and scams associated with them.

In December last year, DBS set up an exchange for digital assets to provide institutional investors and accredited investors with tokenisation, trading and custody services. The digital exchange currently has $80 million in assets under custody.

Chin says that tokenisation can also be applied in real-estate investments, where more than one person or entity can own a fraction of a property through blockchain technology, making real estate investment more affordable and accessible. Currently, this trend is in its nascent stage.

“It’s imperative to understand the times. Tokenisation is a real financial trend, and we will only see more blockchain millionaires being made,” Chin adds.

As his clientele will now include more of such ultra-high-net-worth individuals, Chin is working on an “end-to-end investment platform that will make the entire investment process pleasant and easier”, he says. This will be launched later this year.

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