Sim Lim Square a 99-year leasehold tenure from 1983 sits on a land area of 78,152 sq ft

The owners of the IT as well as electronics shopping mall Sim Lim Square are planning to give the sale an additional chance. A group sale commission (CSC) established at the close of June is looking for a consultant in marketing to assist them in the process.

The Botany at Dairy Farm developer comes after the tender for the site development was awarded to Sim Lian Group.

It will be the owners of the company’s two attempts at conducting a joint sale. The first one was in the year of 2019 and featured the initial price of $1.1 billion. It was unable to secure the required 80% consent from owners for the sale to proceed. This led the CSC to increase it up to $1.25 billion. The auction ended in July, but it did not attract any bids. In the month of December, Sim Lim Square was renewed for sale at the same reserve amount, however it failed to find buyers.

Three years later three years later, the new CSC is aiming for a different outcome in an increasingly buoyant property market that has emerged from the pandemic. “Now since the property market is booming we’re hopeful of an en bloc sale that is successful this time around,” claims Rajesh Bafna who is a CSC member. of the CSC and spokesperson for CSC.

Sim Lim Square was developed by Sim Lim Realty, a affiliate of the Sim Lim Group of Companies. It was opened in 1987. The strata-titled property has 492 commercial units arranged across the building’s six levels as well as two levels of basement. The development is situated on land of 78,152 square feet that is designated for commercial use and has a leasehold tenure of 99 years starting in 1983.

Retail environment that is challenging

The majority of the owners of Sim Lim Square have been there for a long period of time according to Raymond Chua, chairperson of Sim Lim Square’s Management Corporation Strata Title (MCST). “A number of them have their own businesses in their own shops,” he adds. There are currently more than 300 owners who control the 492 units in the development.

Chen Lin, Sim Lim Square’s CSC chairperson, states that the mall is one of the only independent IT centers in Singapore. Over 80% of the stores are focused on technology, offering computer, camera , and mobile phone related products and services. “It’s one stop store for everything digital,” she adds. Other stores include food courts as well as a hair salon and the ability to change money.

Like the other retail spaces The mall was also impacted by the pandemic. Chua states that the mall’s reputation is improving since security measures for managing the disease were relaxed and the border was are now open. The current occupancy is around 80% However, Chua estimates that rents are 10% or 20% below levels prior to the pandemic.

Bafna says that the pandemic caused a surge in online shopping that has had a significant impact on the number of people who visit the mall. “Twenty decades ago, when you went into the shopping mall during a Saturday and needed to take the elevator, you’d need to wait for half an hour waiting to get it since there were hundreds of people. Today, it’s not as it used to be,” he laments. With the tougher retail landscape, Bafna believes that the mall’s owners could be more inclined to part with their property through the planned collective sale. “Many of the owners who are older are also on the brink of retirement, and it’s possible that they’d like to make a profit to fund their retiring years,” he adds.

Connectivity is plentiful

Sim Lim Square’s CSC members think that the primary draw for Sim Lim Square’s site is its closeness in proximity to MRT stations. It is located next to Rochor MRT Station, which is on the Downtown Line, while Bugis, Little India and Bras Basah MRT Stations also are close by, offering an additional route towards those on North-East, East-West and Circle Lines. The site is linked to major highways, including that of East Coast Park Expressway, the Central Expressway as well as the Kallang-Paya-Lebar Expressway along with the Ayer Rajah Expressway.

Because of its proximity, Bafna believes the site has a strong potential for redevelopment. “The potential owner may consider developing the site to create part of an overall development” Bafna says.

Because it’s commercial property The sale is not subject to stamp duty on the buyer which makes both locals as well as foreigners able to buy the property.

As per Tan Hong Boon, executive director of capital markets JLL commercial sites are sought-after by developers as long as they can afford the right price. “As numerous developers are running out of landbanks for residential use, they could decide to look at mixed-use or commercial sites,” he adds.

“The right price”

There have been a number of profitable deals that involved large-scale mixed-use and commercial developments in the last year. The most significant transaction to date is the acquisition of Tanglin Shopping Centre for $868 million or $2,769 per square foot per plot ratio in February to the Tanoto family’s Pacific Eagle Real Estate in February.

In the Bugis Beach Road area the Mixed-use developments Golden Mile Complex was sold in May for $700 million to a group that included Far East Organization, Perennial Holdings and Sino Land.

Sim Lim Square’s owners Sim Lim Square are not the only ones looking at the possibility of a billion-dollar collective sale. The month of September was the time for the launch of International Plaza, situated at Tanjong Pagar, in its first attempt at a collective sale with a reserve value at $2.7 billion. It was later launched again in April, at the same price however, it did not receive any bids.

In August the $1.8 billion attempt to sell the collective property to develop a mixed-use project People’s Park Centre in Chinatown ended without any bids.

According JLL’s Tan, determining the correct price is essential to an en bloc sale, that starts by ensuring that the owners manage their expectations regarding the development’s value. “For an attempt at a collective sale to succeed, the sellers need to be realistic, and determine an amount that is appropriate to the property’s characteristics,” he explains.

To purchase Sim Lim Square, the CSC members have stated that they would be willing to lower the cost, but a precise price has not been set. “We are currently evaluating the possibility of reductions in cost with further advice from the designated marketing advisor,” says Bafna.