Free hold 8-storey clan association building for sale by expression of interest
image: Cushman & Wakefield
The freehold institutional building located at 26 Lorong 27A Geylang (the “Property”) has been put up for sale via an Expression of Interest (“EOI”) exercise by the exclusive marketing agent, Cushman & Wakefield. It is currently home to Nanyang Pho Leng Hui Kuan, a Chinese clan association with roots dating back to 1940.
Under the 2019 Master Plan, the Clan Association building site is zoned ‘Residential/Institution’ with a gross plot ratio of 2.8. Completed in circa 2017, the eight-storey building with attic sits on a 9,360 sq ft regular plot and has an overall gross floor area of approximately 26,205 sq ft. Current uses of the Property include office, meeting room, event/function hall with stage, kitchen and a memorial hall.
The Clan Association building site is located within the transforming Geylang precinct where the Urban Redevelopment Authority has carried out extensive rezoning of areas from ‘Residential/Institutional’ to ‘Commercial/Institution’ use. It is poised to benefit from this ongoing rejuvenation.
The Clan Association building is a mere five-minute walk to Aljunied MRT Station which is one MRT stop away from both Kallang and Paya Lebar – both of which are commercial hubs with an abundance of amenities, in addition to the myriad of eateries and entertainment options in the Property’s vicinity.
The Clan Association building site is also only a 10-minute drive to the Central Business District area which is an added convenience to the potential future business hub.
Mr. Shaun Poh, Executive Director of Capital Markets at Cushman & Wakefield, says “This is a rare opportunity to acquire a freehold building which has undergone extensive redevelopment with development cost totalling $32 million. Buyers have the option to use the building for civic, cultural or association/clan purposes or apply for a potential change of use to serviced apartments or co-living residences, subject to approval from the relevant authorities.”
Ms. Brenda Ong, Executive Director of Logistics & Industrial at Cushman & Wakefield, adds “In view of the transforming suburban locality at Geylang/Paya Lebar and the pristine condition of the property, we expect keen interests for this opportunity. The sale can be on a vacant possession basis or with partial/full leaseback arrangement.”
The indicative price of the Clan Association building site is $36 million.
The EOI exercise for the Clan Association building site closes on 20 October 2020, at 3.00pm.
Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “the Clan Association building is attractive investment because Geylang has become an alternative location for expatriates working near town. Geylang is only about 2.5km from Bugis junction and it is also near to Suntec City and Marina square.
“Silently though, Geylang is also gradually known as the second china town where new Chinese citizens and PR congregate to Sze Chuan Food, North Eastern food, Hunan food and so on. Fruit stalls, great food and Geylang, with its proximity to the town centre is coming to the fore. In recent years, there has also been many new developments springing up in Geylang.”
Financing a Property in Geylang
Banks tend to shy away from Geylang in general. Before 2009, many banks shy away from Geylang even number Lorong. That means not many banks would deal in Lorong 4 till Lorong 40. Except for on a case-by-case basis, such as for The Waterina, a 398 units development, completed in 2005, located on Geylang Lorong 40. Even so, the choice of banks was still limited.
The entire market was mostly left to Hong Leong Finance and Singapura finance.
Around or after 2010-2011
More banks are able to finance properties from Geylang Lorong 30 or 32 onwards to Lorong 40. However lesser than Lorong 30 is still a challenge.
OCBC and Maybank can finance properties from Lorong 30 upwards. Hong Leong Finance and Singapura Finance continue to be able to finance across all the even number Lorong subject to customer profile. OCBC and Maybank can finance Lorong 26, 28 subject to project as well as customer profile.
Some of the lenders impose a loading of 0.25% on top of their usual lending rates for Geylang with even number Lorong. Generally though, as long as it is for owner occupied use, 80% loan is possible, subjected to TDSR and credit profile for properties above Lorong 30.
Many residential development sprang up from Lorong 24, 26, 28. The entire area is starting to look and feel more residential as opposed to being a red light district. As such, 1 to 2 banks are able to finance properties in Lorong 26, 28, subject to it being owner occupied and loan-to-value being around 70% and if the credit profile is strong, 80% and good credit profile.
In private conversations with banks, 1 bank (on top of Hong Leong Finance and Singapura Finance) may be able to finance properties in Lorong 6 up to Lorong 24, with loan-to-value capped at around 50 to 60% for clients with good profile. However, many people who opt for 70% to 80% loan will still stick to Singapura Finance or Hong Leong Finance who has loyally supported Geylang properties for many years.
Many banks are viewing Geylang as a risk and impose Lorong restrictions, Loan-to-value restrictions as well as a cap on the quota in terms of the amount of loan lent to this area.
Sometimes you will hear comments such as, “normally we can finance this project, but we have no more quota this month”. This is an example of a cap in the quota to limit their concentration risks. Many banks internally will require Level 2 approval for Geylang properties, this means that any such property financing will be escalated to the next higher management level for their decision.
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