Portfolio of nine conservation shophouses on Desker Road-Rowell Road for sale at $66 mil

/ EdgeProp Singapore |

July 6, 2023 1:00 PM SGT

The five adjoining shophouses at 99 to 107 Desker Road (Picture: Albert Chua/The Edge Singapore)

SINGAPORE (EDGEPROP) - On the ground floor of a shophouse at the corner of Desker Road and Serangoon Road, an eatery called Usman’s runs a brisk business. The no-frills restaurant has been there for over 20 years, serving Indian and Pakistani dishes like garlic and butter naan, chicken masala and tandoori chicken.

Usman’s customers are a wide mix of people — from tourists taking a lunch break while they explore the sights in Little India, to locals coming from a shopping trip at the nearby Mustafa Centre on Syed Alwi Road. The area hums with activity as pedestrians flock to the various businesses that occupy the conservation shophouses lining Desker Road and the neighbouring Rowell Road, stretching from Serangoon Road on one end to Jalan Besar on the other.

The businesses have an eclectic mix of offerings, perhaps mirroring the shophouses’ location straddling the Little India and Jalan Besar areas. On the side closer to Serangoon Road, visitors will find eateries, wholesale retailers selling food and grocery items, barber shops and handphone gadget stores. Closer to the Jalan Besar side, however, newer and trendier establishments have started cropping up, including Japanese restaurant Ikigai Yakitori, French bistro Allo, and sourdough pizza shop Goldenroy. The upper floors of some shophouses have been renovated and now house enterprises such as advertising agency Zoo Group and marketing consultancy That Marketing Guy.

The portfolio includes an adjoining pair of shophouses at 81 and 83 Rowell Road (Picture: Albert Chua/The Edge Singapore)

Sammi Lim, founder and executive director of Brilliance Capital, says shophouses along the Desker Road-Rowell Road stretch are seeing growing demand from businesses drawn to cheaper rents compared to shophouses in the CBD. The same holds for investors. “Given the high prices of CBD shophouses, buyers are increasingly considering city-fringe areas with much stronger growth potential,” she says.

A portfolio of nine freehold conservation shophouses along Desker Road and Rowell Road is up for sale through a public tender that will close on Aug 15. The portfolio, which has a mix of two-storey and two-storey-with-attic shophouses, occupies a total land area of 10,557 sq ft and a built-up area of 22,898 sq ft. Lim, who is handling the sale, says the shophouses are being sold collectively with a guide price of $66 million, or $2,882 psf on the built-up area.

Recently refurbished, fully-leased units

The portfolio comprises six units on Desker Road — five are adjoining shophouses at 99 to 107 Desker Road and another shophouse is across the street at 106 Desker Road. The other three shophouses are on Rowell Road, comprising an adjoining pair at 81 and 83 Rowell Road and another property at 99 Rowell Road.

The shophouses, each with individual land titles, are zoned for commercial use under the URA 2019 Master Plan and fall within the Little India Conservation Area in District 8. The shophouses are less than a 10-minute walk from the Jalan Besar (Downtown Line) and Farrer Park (North-East Line) MRT Stations. (Find Singapore commercial properties with our commercial directory)

At 99 Rowell Road, a signboard shows the Candy Monster store is slated to open in August (Picture: Albert Chua/The Edge Singapore)

Lim says the seller of the portfolio, a real estate investment firm linked to a family office, is seeking to divest the assets as part of its capital recycling strategy. Caveats lodged with URA Realis show that except for 101 Desker Road (which did not have a caveat lodged, though a property title search shows the property changed hands in June 2022), the shophouses in the portfolio were purchased through various transactions in 2021.

That year, 81 and 83 Rowell Road were acquired for $9.4 million in May, while 99, 101, 103, 105 and 106 Desker Road changed hands in July, with the shophouses costing between $3.1 million and $3.8 million each. The shophouse at 99 Rowell Road was purchased for $3.2 million in August 2021, followed by 107 Desker Road for $3.13 million later that year in October.

Lim says the seller did extensive refurbishment at most of the units before leasing out the properties. All shophouses are currently fully rented out, and the portfolio will be sold with the existing tenancies. Lim estimates that the portfolio currently offers gross rental yields of around 2%, though she notes that rents have room to grow as most of the leases were signed during the pandemic and are due for renewals in one to two years.

At 106 Desker Road, a cat hotel, T&J Cat Inn, operates out of the upper floors (Picture: Brilliance Capital)

Unique tenant mix

The shophouses in the portfolio are currently fully leased to a diverse mix of tenants. 99 and 101 Desker Road are occupied by a construction contractor and a cat hotel, respectively, while 103 Desker Road is tenanted by a vegetarian restaurant. 105 Desker Road houses art gallery and ceramic art studio 7879 Gallery & Clayworks on the ground floor and a cat cafe on the upper floors. At 106 Desker Road, an artisanal gelato shop called Aphrodite rents the ground-floor unit, while another cat hotel, T&J Cat Inn, operates on the upper floors. A martial arts-themed cafe occupies 107 Desker Road.

Along Rowell Road, the ground floor of 81 Rowell Road houses a cafe and art space, Main Street Commissary, while a liquor store and minimart take up the ground-floor unit next door at 83 Rowell Road. The upper floors of the two shophouses are leased to a creative agency that also runs Main Street Commissary. At 99 Rowell Road, which is currently being renovated, a pastel yellow facade announces the impending opening of Candy Monster in August.

The unique mix of tenants was intentionally cultivated, Lim says. “The seller was selective about the tenants for their properties as they wanted to introduce niche and interesting concepts.” Ultimately, the goal was to help boost the overall profile of the vicinity in tandem with the ongoing rejuvenation of the surrounding locale.

cafe at 81 Rowell Road - EDGEPROP SINGAPORE

Main Street Commissary, a cafe at 81 Rowell Road (Picture: Brilliance Capital)

First-mover advantage

Desker Road and Rowell Road have undergone significant transformation over the last decade. In the past, the two streets had a more notorious reputation as a red-light district, similar to that in Geylang and the nearby Jalan Besar area.

Over the years, however, much of the area’s vice activities have been eradicated, especially as the government has cracked down on illegal brothels and the pandemic has further dampened vice activities. Desker Road and Rowell Road have been cleaned up and continue to evolve as the shophouses along these streets see a flurry of new owners and tenants.

Since January 2021, there have been 27 shophouse transactions on Desker Road and Rowell Road, based on caveats lodged. The most recent transaction occurred last month when a shophouse at 21 Rowell Road fetched $5.2 million. Before that, a pair of shophouses at 107 and 109 Rowell Road was sold for $13.5 million in April.

Brilliance Capital’s Lim sees the ongoing rejuvenation of the area on a trajectory similar to the transformation that has taken place in other conservation shophouse streets like Amoy Street in Chinatown and Tras Street in Tanjong Pagar, which have seen an influx of high-end eateries and cafes. “This is a dynamic neighbourhood that is being increasingly sought after as it becomes a thriving cultural, culinary and commercial destination,” she says.

art gallery and ceramic art studio 7879 Gallery & Clayworks - EDGEPROP SINGAPORE

The ground floor of 105 Desker Road houses art gallery and ceramic art studio 7879 Gallery & Clayworks (Picture: Brilliance Capital)

The future buyer of the portfolio up for sale would have a first-mover advantage that allows them to tap into the area’s full potential for capital and rental appreciation, Lim says. She sees the portfolio’s guide price of $2,882 psf as an attractive price-point for a collection of freehold commercial assets in a prime city-fringe location.

She expects interest from various investors, including local and overseas corporates, institutional funds, private funds, family offices and ultra-high-net-worth individuals. “The breadth of the portfolio offers the buyer flexibility to lease the units out to a wide range of business types, subject to approvals from the authorities,” she says. The five adjoining shophouses on Desker Road also have the potential to be turned into accommodation, such as a coliving space or serviced apartment.

Lim adds that the incoming buyer can choose to hold the property for the long term, capitalising on the portfolio’s capital growth and stable rental yield while also retaining the option of selling the shophouses collectively or individually.

As Desker Road and Rowell Road continue to transform, Lim believes that the potential of the area — and thus that of the portfolio — is clear for investors. “This is an opportunity to invest in one of Singapore’s most desirable and evolving neighbourhoods.”