Read more: Marina Bay and Raffles Place precinct increased 1.1% averaging at $10.36 psf per month
The owners of the IT as well as electronics shopping mall Sim Lim Square are planning to give the en bloc sale a second chance. A group sales committee (CSC) established at the end of June is looking for a consultant in marketing to assist them in the process.
The owners who have made their two attempts at conducting a group sale. The first attempt took place in the year of 2019 and featured an initial proposal of $1.1 billion. It was unable to get the required 80% approval required from the owners, causing the CSC to increase prices by $1.25 billion. The auction ended in July of 2019 without receiving any bids. In the month of December, Sim Lim Square was renewed for sale at the same reserve amount, however it was unable to find an interested buyer.
Three years later three years later, the new CSC is aiming for a new outcome amid an improved property market emerging from the pandemic. “Now after the housing market is booming and we’re optimistic of an en bloc sale that is successful this time around,” declares Rajesh Bafna who is a CSC member. of the CSC and spokesperson for CSC.
Sim Lim Square was developed by Sim Lim Realty, a affiliate of the Sim Lim Group of Companies. It was opened in 1987. The strata-titled property has 492 commercial units arranged across the building’s six levels with two basement levels. The development is situated on land of 78,152 sq feet which is designated for commercial use and has a leasehold tenure of 99 years starting in 1983.
Retail environment that is challenging
The majority of the owners of Sim Lim Square have been there for a long period of time as per Raymond Chua, chairperson of Sim Lim Square’s Management Corporation Strata Title (MCST). “A majority of them have their own businesses in their stores,” he adds. Today, there are more than 300 owners who collectively have ownership of the 492 units within the development.
Chen Lin, Sim Lim Square’s CSC chairperson, claims Sim Lim Square is one of the only independent IT-focused malls that are located in Singapore. Over 80% of the shops are focused on technology, offering computer, camera , and mobile phone related products and services. “It’s one stop store for everything digital,” she adds. Other stores include food courts and a hair salon and the ability to change money.
As with the majority of the retail landscape it was also affected by the pandemic. Chua says that the mood has improved since the precautionary measures were removed and the border was are now open. The current occupancy is more than 80% however Chua estimates that rents are 10% up to% lower than pre-pandemic levels.
Bafna says that the pandemic increased the popularity of e-commerce, which has significantly affected pedestrians who go to the mall. “Twenty decades ago, when you went into the shopping mall during a Saturday and wanted to use an elevator ride, you’d need to wait for a half hour waiting around for it, because there were hundreds of people. Now, it’s nothing like it used to be,” he laments. With the tougher retail market, Bafna believes that the mall’s unit owners might be more inclined to sell their property through the planned collective sale. “Many of the owners who are older are also on the brink of retirement, and it’s likely that they’ll want to take advantage of the opportunity to earn money to fund their retiring years,” he adds.
Connectivity is plentiful
Sim Lim Square’s CSC members think that one of the main benefits of Sim Lim Square’s site is its closeness in proximity to MRT stations. It is situated next to Rochor MRT Station, which is on the Downtown Line, while Bugis, Little India and Bras Basah MRT Stations also are accessible by foot, giving access towards those on North-East, East-West and Circle Lines. The site is linked to major highways, including those of the East Coast Park Expressway, the Central Expressway and the Kallang-Paya-Lebar Expressway as well as the Ayer Rajah Expressway.
Due to its connectivity, Bafna believes the site has a strong potential for redevelopment. “The next owner might think about developing the site to create an integrated project,” Bafna suggests.
Since it’s commercial property it is not subject to any additional stamp duty for buyers as both locals and foreign buyers able to buy the property.
As per Tan Hong Boon, executive director of capital markets JLL commercial sites are still sought-after by developers as long as the cost is reasonable. “As numerous developers are running out of residential landbanks, they might be looking at mixed-use or commercial sites,” he adds.
“The right price”
There have been a number of lucrative deals involving large-scale mixed-use and commercial developments in the last year. The most notable transaction thus far has been the purchase of Tanglin Shopping Centre for $868 million, which is $2,769 per square foot per plot ratio in February to the Tanoto family’s Pacific Eagle Real Estate in February.
In the Bugis Beach Road area in the Bugis-Beach Road area, a mix-use construction Golden Mile Complex was sold in May for $700 million to a group that included Far East Organization, Perennial Holdings and Sino Land.
Sim Lim Square’s owners Sim Lim Square are not the only ones who are eyeing the possibility of a billion dollar collective sale. The month of September was the time for the launch of International Plaza, situated within Tanjong Pagar, in its first attempt at a collective sale with a reserve at $2.7 billion. It was later launched again in April, at the same price however, it did not receive any bids.
In August in August, the $1.8 billion attempt to sell the collective property to develop a mixed-use project People’s Park Centre in Chinatown ended without any bids.
According JLL’s Tan, determining the appropriate price is crucial to an en bloc sale, which begins with the owners determining their expectations about the development’s value. “For an attempt at a collective sale to succeed, the sellers must be realistic and determine prices that reflect the characteristics of the site,” he explains.
To purchase Sim Lim Square, the CSC members have stated that they are willing to negotiate a lower cost, but a precise price has not been determined. “We are considering internally reductions in cost with further advice from the designated marketing advisor,” says Bafna.
