Knight Frank Singapore today announced the launch of the sale of Beauty World Plaza by tender. Beauty World Plaza located in District 21, is a mixed commercial and residential development comprising a single block with 61 retail units and 30 residential units, with a site area of 2,305.6 sq m (approx. 24,817 sq ft).
Under the 2014 Master Plan, the Beauty World Plaza is zoned “Commercial & Residential” with a Gross Plot Ratio (GPR) of 3.0.
Beauty World MRT station, which conveniently abuts the development, has full sheltered access to its entrance. Located within a 300-metre radius are supermarkets, eateries, schools, as well as a wet market. Established schools and tertiary institutions are also located close by, including Methodist Girls’ Primary and Secondary Schools, Pei Hwa Presbyterian Primary School, Ngee Ann Polytechnic and the Singapore University of Social Sciences.
Major arterial roads as well as expressways such as the Pan-Island Expressway (PIE), Bukit Timah Road, Dunearn Road, Clementi Road and Ayer-Rajah Expressway (AYE) provide seamless connectivity to other parts of Singapore. It takes only 25 minutes via the Downtown Line, or a 20 minutes’ drive, to get to the Central Business District. Additionally, Beauty World Plaza is less than 30 minutes’ drive to Changi Airport.
The owners of Beauty World Plaza are expecting offers above their reserve price of S$165 million.
With no development charge payable for redevelopment to the maximum permissible gross floor area of 7,001.38 sq m, the land rate works out to S$2,189 per square foot per plot ratio (psf ppr).
Mr Ian Loh, Executive Director and Head of Investment and Capital Markets, Knight Frank Singapore, said: “Beauty World Plaza is strategically located, with key transport infrastructure and amenities in its immediate vicinity. An outline application for the change of use of the residential component to serviced apartments has been submitted to URA, pending their response.”
The tender for Beauty World Plaza will close on 30 January 2019, Wednesday at 3.00 pm.
With the winding down of the success of residential en bloc sales, commercial properties are now trying to join in the bandwagon. Many commercial en bloc sale attempts fail because the asking prices are often too high. Two critical factors affecting the success of commercial sites going en bloc are pricing and location. Older commercial buildings especially, may see a need to catch the current wave as an exit strategy as their rental yields come under pressure due to competition from newer commercial buildings.
The biggest gainers following the new property cooling measures is likely be owners of strata portfolio of offices and shophouses approved for commercial use. The property cooling measures affected almost all categories of buyers and is predicted to achieve its intended objectives of cooling demand and moderating price growth.
One report said investors looking for alternatives to park their money in the wake of property cooling measures, would divert their attention to the strata office and shophouse markets as they are not subjected to this round of purchase or sales restrictions/encumbrances.
Commercial properties such as the Beauty World Plaza may be bought under personal name, but total debt servicing Total Debt Servicing Ratio (TDSR) will apply on the individual’s income on such purchases. To buy a commercial or industrial property under company name, total debt servicing ratio TDSR also applies on the individual director’s income if the company is an investment holding company or an operating company that is loss-making or does not have sufficient cash flow to servicing the repayment.
To buy a commercial or Industrial property under company name where the company is well established with an existing operating business with strong financials, TDSR may be waived on the individual. However director is usually required to become personal guarantors of the loan the company undertakes. Hence this may affect the director’s other purchases, such as for buying a residential property, due to the loading from the TDSR for guaranteeing a loan.
Some banks even advertise 100 to 120% loan. This is due to a combination of working capital as well as commercial/industrial property loan, but this only applies to company with strong cash flow position. Commercial property is different from residential property and the considerations are more complex and varied, though the payoff may be worthwhile for discerning investors.
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