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Developer Hiap Hoe selling 39 strata-titled shops

Local property group Hiap Hoe is selling 39 strata-titled shops for about $85 million, as part of moves to divest non-core assets.

The units are in three commercial buildings across the island.

The biggest tranche is in the basement of Parklane Shopping Mall in Selegie Road where a suite of 33 shops is on offer for about $55.6 million.

Hiap Hoe wants to sell the units, which have 59 years left on their lease, to a single buyer, said Mr Karamjit Singh, head of investments and residential at Jones Lang LaSalle, yesterday.

The selling price works out to about $2,200 per sq ft (psf), based on the units’ strata floor area of 25,317 sq ft.

They represent 17 per cent of the entire building’s share value.

“This offering poses an attractive play to investors as it offers an almost exclusive use of the basement level, which would allow scope for repositioning and improving the tenant eco-system, such as introducing a new crowd-pulling anchor,” said Mr Singh.

“Some investors may also find it attractive to acquire the units in bulk, with a view to selling down the units individually at a later stage.”

Hiap Hoe is also selling two units on the fourth floor of Parklane with a total price of about $4.75 million – or $1,300 per sq ft – expected.

The units, which house a karaoke lounge, have a combined floor area of about 3,660 sq ft.

Parklane tried unsuccessfully for a collective sale in 2007.

Owners at the neighbouring Peace Centre and Peace Mansion shopping centres tried to sell en bloc in 2011 for $700 million but that also fell through.

Mr Singh thinks buying interest in the units would still be strong as investors are increasingly looking at commercial property – especially retail units.

He noted that as well as the rental income, investors will not have to stump up the additional buyers’ stamp duty levied on residential property.

“There’s an upside because once the tenants do well and develop goodwill, they can afford to pay higher rentals,” he said.

Last year, a basement unit at Parklane changed hands for $2,192 psf.

Based on the indicative price of $55.6 million, annual yields at the units are estimated to be 3.5 per cent, said Mr Singh.

Three shops at Bukit Timah Plaza with 61 years left on their leases are also up for sale.

Two of the units on the basement level have a combined floor area of 1,206 sq ft and a price tag of $3.86 million, said Jones Lang LaSalle.

A larger unit of 4,930 sq ft is on the ground floor, with a selling price of $1.83 million.

At Balestier Point, a freehold unit of 5,608 sq ft being used as a nightclub is going on the market for $8.4 million.

The expression of interest for the shops will close at 2.30pm on Oct 29.

– See more at: http://business.asiaone.com/news/developer-hiap-hoe-sell-39-strata-titled-shops#sthash.KRQSWPRI.dpuf