For sale at $66 million is a portfolio of nine historic shophouses on Desker Road-Rowell Road
In the basement of a shophouse on the intersection of Desker Road and Serangoon Road, an eatery known as Usman’s has a steady business. The restaurant with no frills is in operation for more than 20 years and serves Indian dishes as well as Pakistani dishes such as Butter naan with garlic chicken masala and tandoori chicken.
Usman’s customers comprise a broad variety of people ranging from tourists who are taking breaks for lunch while they take in the sights of Little India, to locals after a trip to shop in the adjacent Mustafa Centre on Syed Alwi Road. The entire area is bustling as people walk through the numerous businesses located in the old shophouses with conservation lining Desker Road and the neighbouring Rowell Road, which runs across Serangoon Road on one end to Jalan Besar on the other.
The shops offer a diverse range of services, perhaps reflecting the shophouses’ position that are located between those of the Little India and Jalan Besar areas. The side that is close towards Serangoon Road, customers will find restaurants wholesale stores offering food and other products, barber shops, and gadget stores for handphones. Nearer in is the Jalan Besar side However, newer and more trendy establishments are popping up, like Japanese Ikigai’s Yakitori restaurant, French bistro Allo, and sourdough-based pizza shop Goldenroy. The upper floors in some shops have been renovated and are now home to companies like the Advertising agencies Zoo Group and marketing consultancy That Marketing Guy.
Sammi Lim, founder and executive director of Brilliance Capital, says shophouses on the Desker Road-Rowell Road stretch are experiencing a growing demand from businesses who want lower rents than shops in the CBD. This is also true for investors. “Given the cost of CBD shops, investors are increasingly looking into city-fringed areas that have a greater growth potential,” she says.
A collection of nine conservation shophouses with freehold between Desker Road and Rowell Road is available for sale via an auction that will end on the 15th of August. The portfolio, which has a mix of two-storey and two-storey-with-attic shophouses, occupies a total land area of 10,557 sq ft and a built-up area of 22,898 sq ft. Lim, who is handling the sale, says the shophouses are being sold collectively with a guide price of $66 million, or $2,882 psf on the built-up area.
Recently renovated, fully-leased units
The portfolio includes six units along Desker Road — five are shophouses that adjoin 99-107 Desker Road and another shophouse is situated across on the same street, at Desker Road. The remaining three shops are located on Rowell Road, comprising an adjacent pair of properties at 81 and Rowell Road and another property located at 99 Rowell Road.
The shophouses, each with its own titles to land are commercially zoned in the URA 2019 Master Plan and are located in District 8 of the Little India Conservation Area in District 8. The shophouses are just 10 minutes walk to the Jalan Besar (Downtown Line) and Farrer Park (North-East Line) MRT Stations.
Lim claims that the buyer of the portfolio is an investment company in real estate connected to an office of the family and is looking to sell the properties in the capital recycling strategy. Caveats filed by URA Realis show that except for 101 Desker Road (which did not have a caveat filed however the property title search indicates that the property changed ownership on June 20, 2022) The shophouses within the portfolio were acquired by way of various trades in 2021.
The year before the 81 and that year, 81 and Rowell Road were acquired for $9.4 million in May. Meanwhile, 99 101, 103 101, 105, as well as the 106 Desker Road changed hands in July, with the shops being valued somewhere between $3.1 millions and $3.8 million for each. The shophouse on 99 Rowell Road was purchased for $3.2 million in August 2021. It was and then the shophouse at 107 Desker Road for $3.13 million the following year in the month of October.
Lim says that the seller has done extensive repairs to the units prior to leasing the properties. Shophouses in all are currently let, as well as the entire portfolio is set to be sold along with the current tenancies. Lim believes that the portfolio is currently offering gross rental yields of about 2% but she also notes that rents can increase since the majority of leases were signed prior to the pandemic and scheduled to renew within one up to 2 years.
Unique tenant mix
The shophouses that make up the portfolio are currently lease to a range of tenants. 99 and 101 Desker Road are occupied by construction contractors and a cat-friendly hotel respectively, and the 103 Desker Road is tenanted by an eatery that is vegetarian. The 105 Desker Road houses art gallery and a studio for ceramic art the 7879 Gallery & Clayworks on the ground floor as well as an animal cafe on the upper floors. On the 106 Desker Road, an artisanal gelato store called Aphrodite is rented out on the ground floor and a pet hotel called T&J Cat Inn, is located at the top floors. A martial arts-themed cafe occupies 107 Desker Road.
On Rowell Road, the ground floor of 81 Rowell Road houses a cafe and art space called Main Street Commissary. miniart and a liquor shop occupies the ground floor next to it at 85 Rowell Road. Upper floors in both shops are leased to an agency for creatives that operates Main Street Commissary. The 99th floor of Rowell Road, which is currently being renovated, a pale yellow façade announces the upcoming debut of Candy Monster in August.
The diverse tenant mix was deliberately developed, Lim says. “The seller had a strict selection of the tenants they chose for their properties in order to present unique and intriguing ideas.” In the end, the aim was to improve the profile of the area in conjunction with the ongoing revitalization of the area around it.
Advantage of the first mover
Desker Road and Rowell Road have seen significant changes in the past decade. Prior to that, both streets had a shadier image as a red-light zone similar to Geylang and the adjacent Jalan Besar region.
In the past However, a lot of the vices in the area are now gone, particularly since the government has taken action against illegal brothels, and the scourge of disease has hampered criminal activities. Desker Road and Rowell Road have been cleaned and are still evolving as the shops along these roads are flooded with of new tenants and owners.
In the month of January, 2021 there’s been 27 transactions of shophouses that took place on Desker Road and Rowell Road Based on caveats that were lodged. The most recent transaction took place this month, when a shophouse located at 21 Rowell Road fetched $5.2 million. Prior to that the shophouses on 107 and 109 Rowell Road was sold for $13.5 million in April.
Brilliance Capital’s Lim believes that the ongoing revitalization of the area as an identical path to the change that has been taking place in other historic street shops like Amoy Street in Chinatown and Tras Street in Tanjong Pagar, which have witnessed an increase in gourmet eateries and cafes. “This is a thriving neighborhood that is becoming more sought-after in the process of becoming a flourishing commercial, cultural and culinary location,” she says.
The buyer who will purchase the portfolio for sale will have advantages of first-mover that allow them to benefit from the potential of the region for rental and capital growth, Lim says. She views the portfolio’s recommended price of $2,882 per square foot as a desirable price point for a portfolio of commercial freehold assets located in the city’s fringe.
She anticipates interest from a variety of investors from both overseas and local institutions, corporates, family offices, private funds and ultra-high-net worth individuals. “The size of the portfolio gives the buyer the flexibility to lease out the units to a range of companies subject to approval from government authorities” the agent says. The five adjacent shophouses located on Desker Road also have the possibility of being converted into housing, for example, co-living spaces or a apartments that are serviced.
Lim adds that the potential buyer has the option of holding the property in the long run and benefit from the portfolio’s capital appreciation and an enduring rental yield while having the possibility for selling shophouses in a group or separately.
In the meantime, as Desker Road and Rowell Road continue to change, Lim believes that the potential of the areaand, consequently, the portfolio evident for investors. “This is a chance investment opportunity in Singapore’s most sought-after and thriving neighborhoods.”