http://www.straitstimes.com/archive/...trium-20131213

$48m price tag for Sim Lim Square atrium

Published on Dec 13, 2013

By Jermyn Chow


IT IS just an open space on the ground floor atrium of a shopping mall about the size of a large three-bedroom apartment.

There are no permanent walls even to demarcate the area, yet it comes with a very substantial price tag: more than $48 million.

At least that's what the current owners of the 2,756 sq ft space at popular computer mall Sim Lim Square are hoping to get, after they put it up for sale yesterday.

Sim Lim Square is a strata-titled mall, where shop units are owned and rented out by individual owners. This is in contrast to the ownership model in newer malls, which are controlled by a developer or real estate trust.

Although strata-titled shop units are frequently bought and sold, it is rare for open atrium space to be sold to an investor, let alone traded on the market, say property market experts.

The shop space is owned by a home-grown property investment firm, which paid just $18 million for it back in 2007.

The six-storey specialist mall is one of the best-known shopping venues in Singapore for computers and electronic goods and sees a steady flow of local and foreign visitors every weekend.

In 2006, tenants at the mall complained that rents had doubled in the preceding two years, with rentals for prime shops on the first, fourth and fifth storeys costing as much as $40 per sq ft - almost as high as some street-facing mall units in Orchard Road.

This has led to some retailers bowing out of the mall in recent years, in the light of the low profit margins that such goods attract.

The atrium space is currently taken up by four tenants and even at today's asking price, rental returns are expected to be more than 4 per cent, said CBRE associate director for investment properties Sammi Lim.

A back-of-the-envelope calculation shows that to achieve this rental yield, each of the four tenants can expect to pay a whopping $40,000 a month in rent to the new owners.

Mr Nicholas Mak, executive director at SLP International, said the $48 million - or $17,416 per sq ft - price tag would be "too difficult to achieve". He said he has not seen any shop units, even in successful strata-titled malls like Lucky Plaza, being transacted above $14,000 per sq ft.

"With that kind of money, you can buy more units or different kinds of properties in other strata malls... Why sink all the money into just one shop space?"

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