SIN Cheong Building, an ageing six-storey freehold flatted factory building at Jalan Pemimpin, is changing hands for about $36 million.
A Singapore family- owned concern is said to have inked a deal to buy the property and is likely to tap the redevelopment potential of the asset, which is more than 30 years old.
The purchase price reflects a unit land price of about $343 per square foot of potential gross floor area. Analysts estimate the breakeven cost for a new strata industrial project at about $600 per square foot.
Nearby, Ho Bee is expected to launch more than 100 strata industrial units at its freehold project at 1 Pemimpin Drive in the next few months.
The units, which will have an average size of about 1,100 sq ft, will be priced at about $700-$800 psf.
Sin Cheong Building has a land area of 44,001 sq ft and is zoned for Business 1 use with a 2.5 gross plot ratio under Master Plan 2008.
The property can be redeveloped into a new project with a gross floor area (GFA) of about 110,001 sq ft - exceeding the existing property's GFA of about 80,000 sq ft.
HSR brokered the sale of Sin Cheong Building through a tender exercise, which closed on Jan 20, attracting seven bidders as well as a handful of other parties that submitted expressions of interest.
'The property attracted keen interest from mainboard-listed developers, building contractors, family-owned companies as well as private funds,' said HSR's head of investment sales Jeffrey Goh.
The building was sold by Sin Cheong Containers Manufacturing Company Pte Ltd, which is involved in the production of tin cans and containers. The company used to occupy the Jalan Pemimpin property but moved out many years ago to Gul Drive in the Jurong area.
The Jalan Pemimpin building is let to about 41 tenants, with a resulting occupancy rate of about 75-80 per cent.
The leases are said to expire within a year, paving the way for the new owner to redevelop the site.
'There seems to be a shift in investors' interest towards industrial properties as prices in this sector have not seen the same rate of increase compared with the residential sector,' said Mr Goh.
Other property agents also say that some wholesale property investors are switching their focus from the residential sector to the industrial segment. And the onset of the Jan 13 measures to cool the private housing market has led some investors that traditionally invest in the residential or office markets to make queries about putting their money in industrial buildings, said DTZ senior director of investment advisory services, Shaun Poh.