BREAKING: Third time unlucky for Katong Shopping Centre en-bloc
by Suhaile Md
KATONG Shopping Centre (KSC) has failed its latest attempt at a collective sale, confirmed Ms Christina Sim, Director of Capital Markets at Cushman & Wakefield (C&W), yesterday (Mar 27). C&W is the exclusive marketing agent for the property.
The public tender for the freehold property which closed on Mar 13 had only one bidder, whose offer was “below the reserve price” of $630 million, she said. The reserve price is the lowest offer a seller is willing to accept. Ms Sim declined to reveal the exact offer but confirmed it was a China-based company.
This third attempt was made when the earlier attempt late last year was thrown off course by the Urban Redevelopment Authority (URA). The URA shot down the original proposal for a fully commercial mall due to concerns about traffic congestion. Appeals were made even as an ongoing public tender closed on Sep 1. It’s unclear how many had bid for it then.
URA put its foot down. So the proposal had to change to that of a commercial/serviced residence use. Due to the change of plans, another public tender – which is the latest – was opened from Feb 27 to Mar 13. The reserve price was kept the same.
The first attempt
Owners of the strata-titled property had expressed interest in a collective sale as early as 1993, said Mr Winston Low, who bought his first unit at KSC in 1976. But formally, there was “no action” taken until late 2009 when the first Collective Sales Committee (CSC) was formed with Mr Low as the chairman of the CSC. The Dennis Wee Group soon came on board as the marketing agent.
That was the first attempt. However, their efforts fell through in 2010, and did not even make it to the public tender stage, because the reserve price of $440 million was not “attractive enough” for some owners, said Mr Low. As such, less than 60 per cent of the owners, by share value and strata area, signed the collective sales agreement. The law requires an 80 per cent majority for buildings more than 10 years old. KSC is over 40 years old.
The second, and current, CSC was formed on April 24, 2014. Mr Low remained on the CSC but was no longer chairman. The marketing agent was also changed to C&W.
Tenant Mr Chang Kheng Siang was relieved to know that KSC would not be closed anytime soon. Said Mr Chang: “If close, then must retire. Difficult to get place, frankly speaking… all now new building the rent high.”
Mr Chang currently pays over $1,000 a month in rent, for the 200 plus sq ft unit in the basement, to run his New Katong Aquarium shop. Had the 62-year old set up elsewhere, the price would easily double. It also helps, he added, that he has a good relationship with his landlord.
St James Bookshop owner Mr Ronald Neo on the other hand, was “not too worried” as he was prepared, and already had “another place in mind” within the Katong area. The 49-year old has been in the business for more than 20 years and has regular customers. He has shifted at least “three times” since 1987 but since it was always within the Katong area, his customer base was secure. Mr Neo declined to reveal how much he paid for rent.
There are 459 owners, with 425 units in the 87,000 sq ft mall. The owners stood to make a tidy sum had the sale gone through. For example, Mr Low’s two unit space, at over 400 sq ft, cost him $110,00 in 1976. But now “based on signing valuation” it’s between $1.3million and $1.5 million, said the 65-year old.
Owners with a larger share, like City Developments (CDL), stand to make a killing. It owns 60 units and 323 carpark spaces at the mall, reported ST last year (Jun 8).
Curious to know more about the old mall? Read: Katong Shopping Centre: Maid agencies galore.
Featured image from TMG file.
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