Shophouse on Hongkong Street on the market for $10.1 mil
/ EdgeProp Singapore |
The shophouse (second from right, housing City Backpackers) is a four-storey walk-up property with a gross floor area of 5,074 sq ft (Picture: Mondania)
SINGAPORE (EDGEPROP) - A shophouse at 18 Hongkong Street, located off Boat Quay in prime District 1, is up for sale with an asking price of $10.1 million. The four-storey walk-up property has an existing gross floor area (GFA) of 5,074 q ft, inclusive of outdoor balconies on the second, third and fourth floors. Hence, the asking price works out to $1,991 psf based on the existing GFA.
The property sits on a land area of 1,884 sq ft which is zoned for commercial use, with an approved gross plot ratio of 4.2 under the 2019 URA Master Plan. The land has a 99-year leasehold tenure starting from Jan 1, 1951, which means there is a balance of about 27 years remaining on the lease. Krystal Khor, director at Mondania, who is marketing the property, notes that the owner of 18 Hongkong Street had previously obtained planning permission for all four of its floors to be used as a backpackers’ hostel. For the last seven years, the property has been leased to the hostel operator of City Backpackers @ Clarke Quay. However, the planning permission is slated to expire by 2024 and the property can be sold with vacant possession should the buyer prefer, Khor adds.
Map showing the location of 18 Hongkong Street (Source: EdgeProp LandLens)
Redevelopment potential
The property at 18 Hongkong Street lies within the Upper Circular Conservation Area, which is bounded by Upper Circular Road, South Bridge Road, North Canal Road and New Bridge Road. Buildings within the area comprise mainly three- to five-storey shophouses that were built from the 1930s to the late 1960s.
Under URA’s conservation guidelines, the area is classified as one of Singapore’s secondary settlements — post-World War 1 urban developments outside the central city district. Other secondary settlements include areas like Balestier, Beach Road, Jalan Besar, Joo Chiat and Tiong Bahru.
Under this categorisation, the property benefits from having more leeway in terms of redevelopment potential, observes Khor. Unlike conserved shophouses that fall under areas gazetted as historic districts by URA — which includes places like Boat Quay, Chinatown, Kampong Glam, and Little India — that face stricter conservation requirements, those in secondary settlements are allowed a level of flexibility, including the addition of a rear extension subject to the maximum allowable height.
Taking into account 18 Hongkong Street’s approved gross plot ratio of 4.2 and its maximum allowable height of six-storeys, a redevelopment of the property with the rear extension could yield an enlarged GFA of 7,912 sq ft. According to Khor, the owner has submitted an application to obtain planning permission to increase the property’s GFA to 7,912 sq ft via the addition of a fifth-storey extension that comes with a rooftop terrace. “A $250,000 fee for the proposed increment in GFA has already been paid for by the owner,” she notes. At the same time, the owner is also seeking approvals for F&B usage for the first and second floors and office usage for the third to fifth floors.
Khor estimates that construction costs to redevelop and add the extension could be roughly around $4.5 million, barring any changes in requirements. In addition, she gauges the land betterment charge applicable to the redevelopment, including the differential premium to top up the lease to a fresh 99 years, could clock in at around $4.9 million, subject to no changes from the relevant authorities.
In total, she believes the buyer would have to fork out about $19.475 million to purchase and redevelop 18 Hongkong Street, which translates to $2,462 psf based on the potential GFA. This amount excludes the $250,000 already paid by the seller to URA.
‘Good value’
For Khor, the property is an attractive opportunity with good value for investors, even after taking into account the redevelopment fees and costs. “At $2,462 psf, this is a lower entry psf-price when compared to similar leasehold properties in prime CBD areas which are now transacting at prices above $3,000 psf,” she opines.
This includes the sale of a six-storey shophouse at 5 Hongkong Street for $49.8 million last year, she says. The property, which has a 99-year lease from Nov 16, 2011, was sold for $49.8 million. It was previously operated as Hotel Clover 5 Hongkong Street. Based on its built-up area of 14,384 sq ft, this works out to $3,471 psf. The transaction is also the most recent one to occur on Hongkong Street, based on a caveat search through SISVREALink which pulls data from Singapore Land Authority’s transactional records.
Prior to this, a five-storey property at 42 Hongkong Street was sold for $7.2 million in June 2021. The property, which has a land area of 1,661 psf and a balance tenure of 26 years left on the 99-year lease at the time of the transaction, was sold for $7.2 million.
Changing face of Hongkong Street
In the last decade, Hongkong Street, a small, quiet alley originally tenanted by merchants that would ply their trade at Boat Quay, has seen steady change — a ripple effect from the transformation of the waterfront areas along Singapore River into lifestyle destinations. Given its proximity to tourist hotspots such as Clarke Quay and Marina Bay, the street has seen a proliferation of budget and boutique hotels. In addition, it has become home to gourmet F&B establishments, including famous cocktail bar 28 HongKong Street and Spanish eatery FOC Restaurant, as well as specialty fitness centres. “With Clarke Quay MRT Station just a short walk away, the location is ideal,” adds Mondania’s Khor.
She observes that in recent years, the shophouses on Hongkong Street have also started garnering interest among office occupiers, given the area’s proximity to the CBD and the surrounding amenities. In 2018, WOHA Architects, which already occupied 29 Hongkong street, purchased the shophouse next door for $9 million to expand its offices. The same year, a six-storey shophouse at 39 Hongkong Street was sold for $17.2 million and subsequently refurbished into offices that are currently tenanted by IT and creative media firms.
Today, Hongkong Street continues to see ongoing rejuvenation. At the northwest end of the street, along New Bridge Road, a new hotel by property group 8M Real Estate is in the works. The group had purchased a five-storey freehold commercial building at 23 New Bridge Road and four 99-year leasehold adjoining shophouses at 27 to 33 New Bridge Road for a total of $37 million in 2018. (Find Singapore commercial properties with our commercial directory)
Mondania’s Khor believes 18 Hongkong Street will attract keen interest from a diverse pool of buyers, due to its strategic location and its wide redevelopment potential spanning F&B, hotel, offices and retail. In addition, its commercial zoning allows foreigners and companies to purchase the properties without additional buyer’s stamp duty or seller’s stamp duty. The property has another factor going for it: its address number. “The number ‘18’ is considered lucky and auspicious — we expect the building number alone will pique the interest of a number of buyers,” Khor says.
Check out the latest listings near Hongkong Street, Boat Quay, Balestier, Beach Road, Jalan Besar, Joo Chiat, Tiong Bahru, Chinatown, Kampong Glam, Little India, Clarke Quay MRT Station
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