City Plaza unit owners catch collective sale fever

City Plaza, which reportedly has 531 units, including 66 residential units, is known for its wholesale shops, which mainly sell clothing.
City Plaza, which reportedly has 531 units, including 66 residential units, is known for its wholesale shops, which mainly sell clothing.PHOTO: LIANHE WANBAO

SINGAPORE - Collective sale fever is spilling into the commercial sector as City Plaza unit owners prepare for their first annual general meeting in years on Saturday (July 29) to discuss a sale with a possible price tag of as high as $1 billion.

The 18-storey freehold building near Paya Lebar MRT station was completed in 1972 and is known for its wholesale shops, which mainly sell clothing.

The building has 531 units, including 66 residential units, according to Mr Derrick Chan, a City Plaza unit owner who called for the meeting.

Mr Chan told The Straits Times on Wednesday (July 26) that he did so as "it is the right time and space now".

"There is en bloc fever now and Paya Lebar is developing into a business centre. The building is over 40 years old. If we do not go en bloc now, the cost of maintenance will be extremely high," he said.

Mr Chan, a businessman who owns six units at City Plaza totalling 5,400 sq ft, said most of his units were tenanted, but he did not think that the "trend of wholesale clothing is in (their) favour".

He said: "Retail sales are suffering, and wholesale retail is being taken over by (Chinese online site) Taobao. It is not economical to have a shop space and rental is very low."

Mr Chan added that unit owners are eyeing a sale price of between $800 million and $1 billion.

More than 100 people are expected at Saturday's meeting, and he hopes that a collective sale committee can then be formed.

More than half of the unit owners he has spoken to have expressed interest in a collective sale, he added.

One of them, Mr James Tan, said rentals have been falling. He bought his 20 sq m unit in the early 1990s and collected a monthly rental of about $1,200. At the peak, he was getting $1,800 but lately, tenants have been seeking rentals of $1,000 to $1,200.

"Rental rates today are going back to that of the 1990s," he said, adding that even if he were to sell the unit, he did not know if the buyer could get a rental rate that would cover the instalment.

Dr Lee Nai Jia, head of research at Edmund Tie and Company, said that interest in collective sales of residential properties has spilled into the commercial sector, citing the successful collective sale of Citimac. The freehold industrial complex near Tai Seng MRT station is reportedly being sold for $430.1 million.

Dr Lee noted that Katong Shopping Centre also launched a collective sale bid earlier this year, but did not manage to meet its reserve price of $630 million.

"The Paya Lebar area is likely to become a new growth cluster, with Paya Lebar Quarter catalysing the development of the area. Hence, there will be keen interest for City Plaza," he said.

However, he noted that the asking price range of $800 million to $1 billion is "on the high side", as developers have other viable options.