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Singapore’s biggest money laundering case tests city’s weak property market

Shophouses on South Bridge Road in Singapore.
Shophouses on South Bridge Road in Singapore. (Photographer: Edwin Koo/Bloomberg)

By Low De Wei

(Bloomberg) — A mass sale of prized real estate seized in Singapore’s biggest money-laundering case is set to provide a key test of demand for a niche part of the financial hub’s property market.

More than a dozen so-called shophouses, each worth millions of dollars, have been put on sale as the nation’s largest bank DBS Group Holdings Ltd. steps up efforts to reduce about S$100 million ($74 million) in exposure to the scandal, public listings show. At least five more marketed are linked to businesses that took loans from DBS, according to briefing materials and business filings seen by Bloomberg News.


Results of the sales will provide the first indication of demand for the properties in a market that’s been in the doldrums since August. That’s when the China-born money-laundering suspects were arrested, spooking investors who piled into a booming part of the island’s real estate sector in recent years.

“It’s a question of orderly decline or non-orderly decline” for shophouse prices after the Chinese buyer wave fades, said Alan Cheong, executive director of research for Singapore at Savills Plc. “Either a white knight comes in to bail the market out or there’s a great reset.”

Shophouses in Singapore have gone from being seen as colonial relics to symbols of refined urban life. With typical features like terracotta roof tiles, French-style timber windows and brightly-colored facades, they provide a distinctive heritage value for the city-state.

Median prices reached a record in early 2023, as the properties were snapped up for retail, restaurants or bars downstairs, and homes or offices in the upper floors.

But the boom has also been fueled in part by alleged dirty cash, ensnaring banks that provided loans backed by the properties.

Sales of shophouses have plunged in the wake of the record $2.2 billion money-laundering probe. Total transactions fell to S$111 million in the last quarter of 2023, a drop of 65% from the previous three months, according to data on publicly disclosed deals published by the Urban Redevelopment Authority.

What is complicating predictions for how the sales pan out is the opacity of the market. Singapore has just more than 6,500 shophouses, which date back to the 1800s, making them highly coveted.

Authorities in turn have yet to provide a detailed breakdown of all the assets seized, which include other real estate ranging from offices to opulent bungalows, amounting to more than 200 properties.

It’s not fair to assume that the assets up for sale will hurt the market because prices depend largely on the location, although buyers could seek to submit lowball bids, said Tang Wei Leng, head of capital markets in Singapore at Colliers International Group Inc. “Shophouses are finite in supply and the opportunity to own one is very much desired.”

DBS Chief Executive Officer Piyush Gupta said this month that the bank is trying to sell the assets through receivers. “Once they sell the property, we can get our money back,” he said.

South Bridge Road in Singapore.
South Bridge Road in Singapore. (Photographer: Edwin Koo/Bloomberg)

Singapore police said on Feb. 9 that they will lift orders prohibiting the disposal of the properties by DBS “when we are satisfied that the sale is conducted fairly.”

Among the shophouses for sale are five spread across Amoy Street and Telok Ayer Street, popular dining venues in the city center. They are owned by Jiasheng Amoy Pte. At least three more units at Mosque Street, in the Chinatown district, are owned by Jiacai Investments Pte and also being sold, according to marketing materials seen by Bloomberg News.

Bloomberg (Sources: Property advertisements)

The two firms together secured nine loans from DBS between 2021 and February 2023 to purchase such buildings, and are now in receivership.

The director of both companies, Chinese national Su Binghai, did business with one of the 10 arrested in last year’s raids, and is now a subject of police interest after leaving the country, according to the Straits Times. The receiver for the companies, Martin Wong of FTI Consulting, declined to comment.

Other assets for sale are three buildings with a starting price of S$61.6 million in total at Stanley Street in the city center, marketed by real estate agency Knight Frank. They are owned by Aalto Group Pte and Breuer Group Pte, both directed by Chinese national Su Fuxiang, who is also at large and a subject of interest for the police in connection to the alleged ring. KPMG LLP, which DBS appointed as the receiver for both firms, said it isn’t able to provide comments, citing confidentiality.

Another one of Su’s companies, Suyh Pte, owns five shophouses in the city’s red-light district Geylang that are being put on the market by FTI Consulting.

FTI Consulting is also seeking to sell two shophouses in South Bridge Road that count among its tenants the popular Chinese baijiu liquor brand Wuliangye. The units are owned by a business which received loans from DBS and local bank United Overseas Bank Ltd, according to business records. Another suspected associate of the ring, Chinese national Chen Lingling, is a shareholder in the firm.

A Wuliangye liquor store on South Bridge Road.
A Wuliangye liquor store on South Bridge Road. (Photographer: Edwin Koo/Bloomberg)

UOB did not respond to a request for comment.

The sales may be a precursor of more to come. The 10 accused, as well as their associates, directed various companies that own more shophouses across the city, according to property records seen by Bloomberg News. They also obtained loans from banks beyond DBS. The police declined to comment further on whether more banks have been granted permission to sell properties.

Oversea-Chinese Banking Corp had also sued successfully to take possession of an under-construction luxury bungalow at Ocean Drive off Singapore’s mainland, to recover about S$19.7 million from an overdue housing loan it made to one of the 10. “The repossession and sale of the property is currently in motion,” said Joseph Wong, the head of Consumer Credit Risk Management for the bank, in a statement.

—With assistance from Chanyaporn Chanjaroen.

©2024 Bloomberg L.P.