Singapore cafe sold for record S$41.68 million

June 17, 2022

SINGAPORE – A cafe in Tampines changed hands for a record $41.68 million, and some tenants are considering terminating their agreements following a spike in rents.

A company called G&G (21) filed a warning with the Singapore Land Authority in April for the cafe, 21 Street Eating House, in block 201 Tampines Street 21.

The transaction is expected to close next month, local media 8world reported on Wednesday (June 15th).

The deal surpassed the previous record of $31 million for a cafe in Block 155 Bukit Batok Street 11 in 2015.

According to records from the Accounting and Business Regulatory Authority, G&G director Mr. Kiong Tai Weng owns several other businesses, including the 7 Stars coffeehouse chain and U Stars supermarkets.

In 2014, he bought the Hong Kong Street Zhen Ji food court in block 151 Ang Mo Kio Avenue 5 for $7.4 million because the late founder was his mentor, The New Paper reported.

The 604 sq m Tampines cafe, which has 18 stalls, still has 76 years left on its lease, according to a search for title deed information.

Purchase price of $41,682,168 equates to approximately $6,411 per square foot (psf) – nearly on par with the $6,964 psf average for ground floor retail units in Far East Plaza and Lucky Plaza in Orchard Road sold out this year, data from ERA Research and the Urban Redevelopment Authority showed.

Some tenants of the Tampines cafe told the Straits Times that rents there have risen since a new operator took over in April.

The owner of Zaleha Food Corner, who wanted to be known only as Madame Zaleha, 66, said the rent had doubled from $6,000 to $12,000.

“I’ve been doing business here for 23 years, but I think we can’t pay the rent now. I may have to close my stand.

Mrs. Zaleha added that she had to raise prices by 20 to 50 cents and is worried that she will not be able to pay her five employees.

The 604 sq m Tampines cafe, which has 18 stalls, still has a 76-year lease. ST PHOTO: ALPHONSUS CHERN

The owner of Kumamoto Ramen, who wanted to be known only as Ms. Jacquelyn, had to lay off two workers, leaving one worker to man the stand since April.

“We have been making losses since rents have doubled and we cannot raise our prices. That’s why we’re considering pulling out,” said Ms. Jacquelyn, who is in her 40s, adding that she now pays almost $10,000 in rent, which used to be around $5,000.

Another tenant, who declined to be named and runs two stalls at the cafe, said rent had gone up 30% and he had to shell out an additional $10,000 in total for his two stalls.

“Location is good, but business is not good. We have suffered losses since April,” he said.

Some tenants of the Tampines cafe told the Straits Times that rents there have risen since a new operator took over in April. ST PHOTO: ALPHONSUS CHERN

Mr Nicholas Mak, Head of Research and Advisory at ERA Singapore, said there was optimism in the market as lunch and dinner crowds at catering establishments had almost returned to normal levels. before the pandemic.

He noted that the Tampines cafe is surrounded by Housing Commission blocks, which is a good catchment area for potential customers.

“But it also faces competition – there are about four other cafes within a 10-minute walk,” Mr Mak said.

“Buyers need to be mindful of the competition. If they raise rents too much, tenants will simply move elsewhere.

But the $12,000 rent didn’t deter the owner of Hua Xiang Mala Kitchen, who moved there in April.

The owner, who requested anonymity, said business was stable.

The Tampines cafe is surrounded by blocks from the Housing Authority, which is a good catchment area for potential customers. ST PHOTO: ALPHONSUS CHERN

The supply of coffees is limited because HDB has stopped selling them since 1998, noted Lee Sze Teck, senior director of research at Huttons Asia.

Since most cafes have around eight to 10 stalls, the 18 stalls at Tampines Coffee could have driven prices up, he added.

“Buyers typically hold cafes for stable rental returns and rarely let go unless they get a really good offer. Individuals and cafe chains are always on the lookout for such valuable assets,” he said.