Bye, bye, Sim Lim Square? Shop owners make bid for en-bloc sale

SINGAPORE — The en-bloc wave sweeping through the property market could wipe off the iconic “tech mecca” otherwise known as Sim Lim Square, if the mall on Rochor Canal Road makes a successful bid for a collective sale.

Signings for the agreement were brisk, judging from the queue of shop owners spilling out of the management office at the mall’s basement on Thursday (March 15). It was supposed to end by 5pm but went beyond 6pm.

Being a strata-titled mall, the shops at the 462-unit Sim Lim Square are owned by individuals. The signing session was held three days after a second extraordinary general meeting on Monday, which was attended by close to 60 per cent (by share value) of the owners. Of these, 97 per cent voted in favour of the drafted collective sale agreement.

Talk is that there is a S$1.1 billion asking price for the 99-year leasehold property, but when contacted, a spokesperson from the mall’s collective sale committee would not confirm the amount until it goes to tender — after it gets the requisite 80 per cent consent required among owners.

Mr Calvin Ho, 48, a member of the mall’s collective sale committee, told TODAY: “We are confident that the price is right, but at this point, we have not disclosed the number yet.” However, he revealed that owners at the six-storey mall stand to receive between S$1 million and S$60 million if the sale goes through.

Property analysts and observers said that the site is likely to be redeveloped into a hotel, office building or new shopping mall for better yield, and some tenants are already contemplating their options, such as moving their entire business online.

The collective sales committee also said that it will not set any conditions on the redevelopment.

While its maiden en-bloc bid might seem like a lucrative move, there is opposition from some shop owners, including those who have built their business at the mall over decades.

‘LIKE JAPAN LOSING AKIHABARA’

Mr Song Teck Kee, 67, one of the first shop owners there since 1987 when the mall opened for business, said that Singapore losing Sim Lim Square is akin to Japan losing Akihabara, a major shopping area for household electronic goods.

“Many countries have an electronics centre. If you want to repair your laptop, you can go there... If Sim Lim Square sells, I think there won’t be any electronic mall in Singapore anymore. (There is) no chance (that tenants are) coming back.”

Mr Song, who operates camera shop Song Brothers among the 11 units he owns at the mall — with six in the prime area located right in front of the escalator — is not satisfied with the apportionment method chosen as well.

Calling it an “unfair” decision, he explained: “Those on the upper levels seem to benefit more out of it, (while) those on level one or two are not. They are ‘sacrificing’ owners with good locations to give in to those with a bad location, in order to gather a majority (agreement for the sale). I cannot be convinced.”

Coming in the same week as the eye-popping $2.48 billion sales bid by Mandarin Gardens, a condominium in the Siglap area, analysts noted that Sim Lim Square’s purported asking price of S$1.1 billion could be on the high side, but it is the only way to get owners to bite.

Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants, said that a collective sale of a commercial property is a “different kettle of fish” because livelihoods are at stake.

“This involves businesses. You need a good number to attract those who are still hesitant... Some owners have just one property. Do you tell them to wind up their business? If they wind up, they have to be compensated,” he said.

DAYS ALREADY NUMBERED

Other shop owners told TODAY that their days at the mall are already numbered. In recent years, there has been falling traffic even with the opening of Downtown Line’s Rochor MRT Station beside it, and rental yields have gone lower.

They also do not see a need to require the future developer to build another IT mall.

Mr Sameer Aswani, 43, chairman of investment firm Aswani Group Holdings and who owns three units on the first and second floor, said: “The tenant mix now is not strong enough to pull in bigger crowds. This land has a good strategic position and can be put to much better use. A mall with (crowd-pullers like) a cinema and eateries, for a start.”

Citing its close proximity to the planned Ophir-Rochor Corridor — a mixed-use district featuring offices, hotels and residences that will be connected to the established commercial node at Marina Centre — and its direct link to an MRT station, Mr Aswani added that there is an “uptrend” in the property value in the vicinity.

“Maybe owners will gain more if we wait longer, but if there is a decent amount we get back now from the en-bloc sale, then why not? We can also put this money to better use, to ride the upswing in the property market and other businesses.”

Another owner Mohd Salleh Marican, former presidential hopeful and chief executive of clothing store Second Chance, could net about S$30 million from the sale.

Four to five years ago, before traffic started falling, the 68-year-old sold 10 of his 22 units on the fifth floor. He had bought the units collectively from one owner in 2009 during the global financial crisis.

Noting that he finds it hard these days to get a buyer to offer a good price for any of his 12 remaining units, he said: “This place has declined in popularity... The future looks (bleak) for capital gain. This is a good way for owners to exit.”

Mr Ho from the collective sales committee, who runs a private equity firm and owns multiple units, said that the mall’s strata-titled status hindered it sometimes from making improvements. For example, it was near impossible to get all owners to agree to pool funds to build a direct underground linkway connecting the mall to Rochor MRT Station.

He also said that just 60 per cent of the space is being used in the building, compared with most malls’ 90 per cent. “So the question is: How long do you want to sit on a piece of precious land with a great location and high potential?”

ROOM FOR OFFICE SPACE

Analysts said that redeveloping the site to build office space for small- and medium-sized enterprises would give maximum yield, rather than sticking to retail use.

Mr Ku Swee Yong, chief executive of International Property Advisor, reasoned: “Retail, in the next five years, might be suffering from many years of oversupply because consumers are changing their spending habits.”

Agreeing, Mr Nicholas Mak, executive director of real estate investment firm ZACD Group, said: “Malls are already facing their own challenges... There was a time when Orchard Road was the best place to go shopping, even for Singaporeans. Even though (the shopping belt) is still there today... Singaporeans have other options now.”

For tenants at Sim Lim Square, they are already thinking of their next move.

The moment he heard talk of an en-bloc bid last year, Mr Kenny Lai, 53, who has been a tenant for 14 years, started work to “build up an online presence” for his computer servicing and repair company, Infinique Services.

“Most (repair) businesses are already online, so we will just use this as an opportunity to change our strategy. Everything will just go on as usual,” he said, adding that he is contemplating offering door-to-door delivery of services instead paying a hefty rental fee for a physical shop downtown.