The landmark Katong Shopping Centre is looking for buyers again now that plans to redevelop the site into a mall with serviced apartments have been approved.
More than 80 per cent of the owners by share value had agreed to a collective sale last June. However, the sale did not go through as the Government did not give its approval for the proposed redevelopment plans.
"The URA (Urban Redevelopment Authority) had previously rejected the first proposal as there had been concerns about the traffic congestion in the area, which the initial proposal of a fully commercial mall would add on to," said Ms Christina Sim, director for capital markets at Cushman & Wakefield, the sole marketing agent.
She added that the new zoning of the area for commercial/serviced residence use "would not add too much vehicular traffic".
Now that the plans have received the green light, the search for buyers is back on. The property's reserve price remains at $630 million, which translates to a price of $2,248 per square foot of gross floor area.
Ms Sim said the plot should yield more than 400 serviced apartments, based on unit sizes of about 500 sq ft. The ground floor has been kept for commercial use, with the possibility of extending it to a basement floor, she added.
Ms Sim said the URA probably approved the serviced apartment zoning as there is a limited supply of such accommodation.
There are no serviced apartments in the area, although there are hotels like the Holiday Inn Express and Grand Mercure Roxy. It is also near regional business hubs in Paya Lebar and Changi Business Park.
Katong Shopping Centre in Mountbatten Road was Singapore's first air-conditioned mall when it opened in 1973. The mall, which contains 425 units, sits on a freehold plot of nearly 87,000 sq ft. It houses offices, employment agencies, printing and tailoring services shops and, notably, eateries, many of which have been there for decades.
Mr Tan Tieow Teong, the 88- year-old owner of the Dona Manis cake shop famed for its signature banana pie, has been renting a 188 sq ft unit for more than 20 years. He pays about $2,000 for rent. Mr Tan said in Mandarin that he will retire if the collective sale succeeds as he is getting old and rents are too expensive for a small business.
But Mr Winston Low, the 65- year-old owner of tailor shop Marksmen, said the sale could represent a significant gain. He bought his two units for about $110,000 in 1976. He now stands to reap between $1.3 million and $1.4 million from the sale.
But he said he does not mind even if the sale does not go through. "I have nothing to lose. In a few years, a new MRT station will be just five minutes from here. Imagine the convenience, which will make the price even better," he added.
Dr Lee Nai Jia, head of South-east Asia research at Edmund Tie and Company, noted that the reserve price is "relatively high" amid the uncertain external environment and headwinds in the retail and hospitality sectors. Based on caveats, retail shops at the mall had sold for $3,200 psf between 2012 and 2013.
"However, such retail developments are rarely available en bloc and could prove to be a compelling selling point," he added.
The tender exercise closes on March 13.