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Cold Storage will be put up for sale

Cold Storage will be put up for sale.

The owner of Rio Casino in Macau, Loi Keong Kuong, and his family are buying the space leased to Cold Storage on the ground floor of the freehold Holland Road Shopping Centre, sources said.

The price, at slightly more than S$61 million, works out to S$4,976 per square foot (psf), based on the total strata area of 12,260 sq ft. The space comprises seven strata units, all of which are leased to Cold Storage under a long lease that expires in 2020.

The property is being sold by entities controlled by members of an Ng family that is said to have developed the four-storey mall in the 1970s.

When the seven units were put up for sale through an expression of interest (EOI) exercise launched in June 2014, a valuation of about S$92 million had been cited, or S$7,500 psf for the property. After the EOI exercise closed the following month, however, the owner withdrew the property from the market.

This year's price of nearly S$5,000 psf, has been described as fair market value for a prime, freehold retail space sited a stone's throw from an MRT station. Two years ago, the strata retail sales market was more vibrant than it is today.

For the buyer, having Cold Storage provides immediate security of tenancy.

After the lease expires, however, there is potential for the new owner to achieve higher yield by renting out the seven strata units individually or by partitioning the space into smaller areas for leasing. Higher-paying tenants may be found in the F&B business, jewellery store chains or upmarket retail services.

Supermarkets typically pay low rents.

Holland Road Shopping Centre is next to Holland Village MRT station and across from Raffles Holland V, a five-storey building which opened recently; it houses a medical centre and food and beverage outlets, among other offerings.

Early this year, Mr Loi, the buyer of the Cold Storage space on the ground floor of Holland Road Shopping Centre, completed the purchase of two shophouses in Pagoda Street for S$12 million and S$12.2 million, The Straits Times reported.

Adapted from: The Business Times, 10 September 2016