Coffee shop in Yishun sold for $40m in second such sale this year

A coffee shop in Yishun has changed hands for $40 million, with a price per sq ft (psf) surpassing that of some ground-level retail units in the prime Orchard Road shopping belt.

A firm called Y848 lodged a caveat with the Singapore Land Authority (SLA) on May 10 for the 24-hour KPT Kopitiam located at Block 848 Yishun Street 81.

This is the second coffee shop to be sold around this price, after news last week that a coffee shop in Tampines was bought over for a record $41.68 million.

However, the 397 sq m Yishun coffee shop, which has 14 stalls, is smaller than the 604 sq m Tampines coffee shop, which has 18 stalls. This means its psf price works out to be $9,361, compared with $6,411 for the Tampines coffee shop.

The Yishun coffee shop's psf price eclipses the average of $6,964 psf for ground-level retail units in Far East Plaza and Lucky Plaza in the Orchard area sold this year, according to data from ERA Research and the Urban Redevelopment Authority (URA).

It has 78 years left on its lease, two years more than the Tampines coffee shop, which is located at Block 201 Tampines Street 21.

Local media outlet 8world reported that the transactions for both coffee shops have yet to be completed. A caveat lodged with SLA secures a property for the buyer.

An Accounting and Corporate Regulatory Authority (Acra) search on Y848 showed that it was incorporated on May 9, and has the same representatives as the Chang Cheng Group.

The Chang Cheng Group owns more than 160 food outlets in Singapore, including the Chang Cheng Mee Wah coffee shop chain, Chang Cheng Chinese Vegetables Rice and Rong Kee Roasted Delights.

Mr Nicholas Mak, ERA Singapore's head of research and consultancy, said he believes the two big-ticket sales have come as a result of the broad easing of Covid-19 measures that investors wager will bring diners back to coffee shops in droves.

"We could still see some more of such transactions this year, but rising interest rates might dampen such aggressive bids. As interest rates increase, the cost of financing these investments will increase."

Mr Lee Sze Teck, senior director of research at Huttons Asia, said coffee shops are a "resilient asset class" since they serve heartlanders at affordable prices.

While the supply of coffee shops is limited as HDB stopped selling them since 1998, he added that a company like the Chang Cheng Group, with its food and beverage offerings, can own and operate a coffee shop, rather than just earning rent, which could explain the much higher psf price for the Yishun property.

"They could have businesses they could feature in the coffee shop to earn (revenue) at the same time," he said.

Stallholders at KPT Kopitiam said on Friday that they had been informed of the sale, and that the management would change in September.

A woman who works at the beverage stall and wished to be known only as Madam Mok, 50, said workers were unsure if rents would increase.

She added: "We don't know what will take place when they hand over to the new management, but we'll keep working until then and see what happens." 

Correction note: An earlier version of this story said that a caveat lodged with URA secures a property for the buyer. This is incorrect. Caveats for all property transactions are filed with SLA. We are sorry for the error.