Knight Frank announced on Jan 14 that Century Warehouse, an exclusive freehold industrial “B1” development along Pasir Panjang Road, has been sold collectively for S$48.5 million to a private investment company. The sale is S$8.5 million less than the initial asking price of S$57 million when the property was first put up for sale in October last year.
Century Warehouse is an 8-storey freehold industrial warehouse with basement carpark, comprising 35 strata units with a total strata area of 56,539 sq ft. The development sits on a site with an area of 2,824.4 sqm (approx. 30,402 sq ft) and is regular with a frontage of approximately 35 metres onto Pasir Panjang Road, and average depth of 82 metres.
According to the 2014 Master Plan, Century Warehouse is zoned “Industrial (B1)”, with an allowable Gross Plot Ratio of 2.5.
Century Warehouse is nestled within an exclusive industrial enclave, surrounded by industrial developments such as Interlocal Centre and OC @ Pasir Panjang, as well as multi-concepts stores such as tech-enabled grocery and dining destination habitat by honestbee and homegrown craft spirits distillery, Brass Lion Distillery.
The property is within walking distance to both the Pasir Panjang and Labrador MRT stations and enjoys easy access to major arterial roads and expressways such as the West Coast Highway and Ayer Rajah Expressway.
The sale price of S$48.5 million for Century Warehouse translates to a unit rate of S$858 psf on the existing strata area, or land rate of S$638 psf ppr.
Tuan Sing Holdings’ wholly-owned subsidiary, Asiaview Properties, owns 31 out of the 35 strata units at Century Warehouse, and close to 90% of the strata area. It therefore stands to receive S$42.4 million in proceeds from the sale. The rest of the 4 strata units are owned by third parties. All the owners (100%) gave their consensus to sell the property.
Mr Tan Boon Leong, Executive Director and Head of Industrial, Knight Frank Singapore, said:“We received encouraging response during the marketing of the property. Prospects recognised that with the recent opening of habitat by honestbee and Brass Lion Distillery in the immediate vicinity, this is not your conventional industrial enclave.”
Mr Ian Loh, Executive Director and Head of Investment and Capital Markets, added: “Knight Frank is pleased to have represented the owners of Century Warehouse for this transaction. We received a broad range of enquiries for the property – from owner-occupiers, boutique developers and investment funds. Looking ahead, we expect continued demand for both commercial and industrial investment opportunities in 2019.”
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 Century Warehouse 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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