Portfolio of nine conservation shophouses on Desker Road-Rowell Road for sale at $66 million
Desker Road and Serangoon Road corner shophouse which is located on the ground floor of an eatery called Usman’s runs a brisk business. for over 20 years, the ever-brisky business has been operating there, serving authentic Indian and Pakistani cuisines like garlic and butter naan, chicken masala and tandoori chicken.
from tourists taking a lunch break while they explore the sights in Little India, to locals coming from a shopping trip at the nearby Mustafa Centre on Syed Alwi Road are Usman’s customers. The area hums with activity as pedestrians flock to the various businesses that occupy the conservation shophouses lining Desker Road and the neighbouring Rowell Road, stretching from Serangoon Road on one end to Jalan Besar on the other.
mirroring the shophouses’ location straddling the Little India and Jalan Besar areas, The businesses have an eclectic mix of offerings. On the side closer to Serangoon Road, visitors will find eateries, wholesale retailers selling food and grocery items, barber shops and handphone gadget stores. Closer to the Jalan Besar side, however, newer and trendier establishments have started cropping up, including Japanese restaurant Ikigai Yakitori, French bistro Allo, and sourdough pizza shop Goldenroy. The upper floors of some shophouses have been renovated and now house enterprises such as advertising agency Zoo Group and marketing consultancy That Marketing Guy.
Brilliance Capital founder and CEO, Sammi Lim, says shophouses along the Desker Road-Rowell Road stretch are seeing growing demand from businesses drawn to cheaper rents compared to shophouses in the CBD. The same holds for investors. buyers are increasingly considering city-fringe areas with much stronger growth potential with the high prices of CBD shophouses.
A public tender that will close on Aug 15 consist of sales of portfolio of nine freehold conservation shophouses along Desker Road and Rowell Road. 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.
The portfolio comprises six units on Desker Road — five are adjoining shophouses at 99 to 107 Desker Road and another shophouse is across the street at 106 Desker Road. The other three shophouses are on Rowell Road, comprising an adjoining pair at 81 and 83 Rowell Road and another property at 99 Rowell Road.
The shophouses, each with individual land titles, are zoned for commercial use under the URA 2K19 Master Plan and fall within the Little India Conservation Area in District 8. The shophouses are less than a 10-minute walk from the Jalan Besar (Downtown Line) and Farrer Park (North-East Line) MRT Stations
Lim says the seller of the portfolio, a real estate investment firm linked to a family office, is seeking to divest the assets as part of its capital recycling strategy. Caveats lodged with URA Realis show that except for 101 Desker Road (which did not have a caveat lodged, though a property title search shows the property changed hands in June 2K22), the shophouses in the portfolio were purchased through various transactions in 2K21.
That year, 2 shophouse on rowell road acquired for $9.4 million in May, while 5 other shophouses along Desker Road changed hands in July, with the shophouses costing between $3.1 million and $3.8 million each. The shophouse at 99 Rowell Road was purchased for $3.2 million in August 2K21, followed by 107 Desker Road for $3.13 million later that year in October.
extensive refurbishment and renovation work were done to the shophouses at seller’s own expenses before leasing out them. All shophouses are currently fully rented out, and will be sold with the existing tenancies. Lim estimates that the portfolio currently offers gross rental yields of around 2%, though she notes that rents have room to grow as most of the leases were signed during the pandemic and are due for renewals in one to two years.
The shophouses in the portfolio are currently fully leased to a diverse mix of tenants. 99 and 101 Desker Road are occupied by a construction contractor and a cat hotel, respectively, while 103 Desker Road is tenanted by a vegetarian restaurant. 105 Desker Road houses art gallery and ceramic art studio 7879 Gallery & Clayworks on the ground floor and a cat cafe on the upper floors. At 106 Desker Road, an artisanal gelato shop called Aphrodite rents the ground-floor unit, while another cat hotel, T&J Cat Inn, operates on the upper floors. A martial arts-themed cafe occupies 107 Desker Road.
Along Rowell Road, the ground floor of 81 Rowell Road houses a cafe and art space, Main Street Commissary, while a liquor store and minimart take up the ground-floor unit next door at 83 Rowell Road. The upper floors of the two shophouses are leased to a creative agency that also runs Main Street Commissary. At 99 Rowell Road, which is currently being renovated, a pastel yellow facade announces the impending opening of Candy Monster in August.
The unique mix of tenants was intentionally cultivated, Lim says. “The seller was selective about the tenants for their properties as they wanted to introduce niche and interesting concepts.” Ultimately, the goal was to help boost the overall profile of the vicinity in tandem with the ongoing rejuvenation of the surrounding locale.
Desker Road and Rowell Road have undergone significant transformation over the last decade. In the past, the two streets had a more notorious reputation as a red-light district, similar to that in Geylang and the nearby Jalan Besar area.
Over the years, however, much of the area’s vice activities have been eradicated, especially as the government has cracked down on illegal brothels and the pandemic has further dampened vice activities. Desker Road and Rowell Road have been cleaned up and continue to evolve as the shophouses along these streets see a flurry of new owners and tenants.
Since January 2K21, there have been twenty-seven transactions for shophouses located on Desker Road and Rowell Road. The most recent transaction occurred last month when a shophouse at 21 Rowell Road fetched $5.2 million. Before that, a pair of shophouses at 107 and 109 Rowell Road was sold for $13.5 million in April.
Lim adds that the incoming buyer can choose to hold the property for the long term, capitalising on the portfolio’s capital growth and stable rental yield while also retaining the option of selling the shophouses collectively or individually.
As Desker Road and Rowell Road continue to transform, Lim believes that the potential of the area — and thus that of the portfolio — is clear for investors. “This is an opportunity to invest in one of Singapore’s most desirable and evolving neighbourhoods.”
Brilliance Capital’s Lim sees the ongoing rejuvenation of the area on a trajectory similar to the transformation that has taken place in other conservation shophouse streets like Amoy Street in Chinatown and Tras Street in Tanjong Pagar, which have seen an influx of high-end eateries and cafes. “This is a dynamic neighbourhood that is being increasingly sought after as it becomes a thriving cultural, culinary and commercial destination,” she says.
The future buyer of the portfolio up for sale would have a first-mover advantage that allows them to tap into the area’s full potential for capital and rental appreciation, Lim says. She sees the portfolio’s guide price of $2,882 psf as an attractive price-point for a collection of freehold commercial assets in a prime city-fringe location.
She expects interest from various investors, including local and overseas corporates, institutional funds, private funds, family offices and ultra-high-net-worth individuals. “The breadth of the portfolio offers the buyer flexibility to lease the units out to a wide range of business types, subject to approvals from the authorities,” she says. The five adjoining shophouses on Desker Road also have the potential to be turned into accommodation, such as a coliving space or serviced apartment.