A well-known Little India property near Tekka Centre is being sold for $317 million to be redeveloped into a mixed project, including a mall and serviced apartments.
The buyer of The Verge, once called Tekka Mall, is Mr Keith Tang, chairman of privately held hospitality company Heritage Group, The Straits Times has learnt.
Mr Tang is the grandson of the late founder of Tangs department store, Mr Tang Choon Keng. He is buying the property – opposite Tekka Centre in Serangoon Road – from Hicom Megah, a unit of Bursa Malaysia-listed DRB-Hicom, which owns 90 per cent of it.
The other sellers are Little India’s retail giant, Mohamed Mustafa & Samsuddin, and B.I. Distributors.
The property was put up for sale about 12 months ago, with an asking price of about $350 million.
Mr Tang’s Heritage Group owns more than 19 luxury hotels and serviced apartments in Australia and New Zealand. He also owns IEQ Global, a lighting technology firm.
The property comprises two blocks: The Verge, a six-storey shopping mall with two basement levels; and adjoining block Chill@The Verge, an eight-storey building with two storeys of retail units and a six-storey carpark with 395 parking spaces and four coach bays. The two blocks are connected by link bridges at levels two, five and six, and together have 238,527 sq ft of retail gross floor area.
Extensive addition and alteration works were carried out on the property in 2009.
The transaction is taking place via the sale of shares in a company which owns the shopping mall.
This should lower the taxation costs, compared with a sale of the asset itself, noted Mr Lee Liat Yeang, a partner in the real estate practice of Rodyk & Davidson.
A share sale entails a tax of 0.2 per cent on the company’s net asset value or the market value of the asset. On the other hand, as the site is zoned “white”, allowing wide-ranging redevelopment, an Additional Buyer’s Stamp Duty of 15 per cent of the purchase price and the usual 3 per cent Buyer’s Stamp Duty for an asset sale would apply.
Mr Leslie Ang, a spokesman for Mr Keith Tang, said Mr Tang plans to redevelop the property into “Studio by Tang” serviced apartments, a mall and a “Signature” block which is likely to be offices or retail spaces. It will be his first commercial property here.
This is in line with his Heritage Group chain’s intention to expand its hospitality portfolio, he said.
The property has almost 80 years left on its lease and outline planning permission has already been obtained.
Including the redevelopment cost, development charges and other costs, the gross development value is expected to be about $480 million or $1,920 per sq ft per plot ratio.
“The acquisition represents a golden opportunity for Mr Keith Tang and his team to strategically unlock value and realise the great potential of what is a prominently located asset in downtown core,” Mr Ang said.
The site’s appeal includes its location in the downtown core planning region near Little India MRT station. Commercial real estate investment trusts will be eyeing such assets, Mr Ang said.
Singapore’s tourism and hospitality sector is set for a boost, given the expansion of Changi Airport and the Jewel project there.
“There are no hotel or serviced apartment sites readily available in the Government Land Sales programme for the first half of next year, save for one site. This is, therefore, a rare gem,” he added.
Mr Alan Cheong, research head of Savills Singapore, noted that, including the sale of The Verge towards the end of this year, the total investment sales value of just over $1.7 billion for this year is still 9.6 per cent below that of last year.
“This puts 2015’s values as the lowest since 2009 when the billows were blowing in the midst of the global financial crisis.”