City Plaza unit owners looking to sell en bloc

Collective sales fever is spilling into the commercial sector as many City Plaza unit owners prepare for their first annual general meeting in years on Saturday, 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 apparel.

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 yesterday that he did so as “it is the right time now”.

He said: “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.”

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 our favour”.

“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 the meeting. He hopes a collective sales committee can then be formed.

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

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 those 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.

Interest in collective sales of residential properties has spilt into the commercial sector, as seen from the successful collective sale of Citimac. The freehold industrial complex near Tai Seng MRT station is reportedly being sold for $430.1 million.

Katong Shopping Centre also launched a collective sales 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.

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

Adapted from: The Straits Times, 27 July 2017

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