Fragrance buying Chinatown shophouses for $20.5 million

SINGAPORE - Fragrance Foodstuff, which sells traditional Chinese snacks and bak kwa (barbecued meat), is buying two prime adjoining New Bridge Road shophouses where it has been leasing the ground-floor space for its flagship outlet for about a dozen years.

It is paying S$20.5 million for the two properties, at the corner of New Bridge Road and Pagoda Street and near the Pagoda Street entrance of the Chinatown MRT Station.

Both properties are on sites with a 99-year leasehold tenure with effect from January 1995, translating to a balance lease tenure of about 77 years.

The combined land area of the two properties is 1,728 square feet; the S$20.5 million price translates to around S$3,535 per square foot (psf) based on their total gross floor area about 5,800 sq ft.

The shophouse pair comprises three storeys and an attic. While the ground-floor space of both units is leased to Fragrance Foodstuff, the upper floors are vacant. The upper floors are accessible via a staircase and an internal lift at Pagoda Street.

The properties are being sold by Yeah Capital Pte Ltd, which is owned by the family that controls listed pawnbroking group ValueMax Group.

The pair of shophouses was previously offered for sale via an expression of interest exercise that closed on Oct 8, 2015. At the time, the asking price was S$28 million. However, that exercise did not lead to a transaction. The deal with Fragrance was sealed through private treaty.

Market watchers said that it made sense for Fragrance Foodstuff to own its flagship premises. Besides making for a good property investment, it would also enable the company to better manage its occupation costs at the property; shophouse rentals for prime Chinatown locations have risen significantly over the years.

Moreover, the group could potentially enjoy a rental income stream from leasing out the upper floors of the shophouse pair it is acquiring.

Founded in 1969, Fragrance Foodstuff operates close to 40 bak kwa outlets in Singapore - including at suburban shopping malls and Changi Airport.

This is the group's first conservation shophouse purchase. It also owns other properties including its factory at 60 Woodlands Terrace.

This article was first published on September 14, 2016.
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