Joo Chiat Hotel put up for sale

Source : Straits Times – 2 Sep 2009

A SMALL low-rise hotel in Joo Chiat Road is up for
sale at an asking price of $20 million to $22 million. Its owner, a local investment firm formed by a group of individual investors, is looking to sell now as market conditions are ripe, said Ms Yong Choon Fah, executive
director of Credo Real Estate, which is marketing the property.

Joo Chiat Hotel, previously known as Astro Hotel, was put up for sale in a tender in 2004. The asking price was up to $9 million, though market watchers reportedly expected bids of only about $7 million. There were no bids. The
three-storey property – a conserved building approved for hotel use in the conservation district of Joo Chiat – has 68 guest rooms and one pub. Both are leased by operators at a total gross annual rental revenue slightly in excess of $1 million, she said. At $20 million, the buyer would secure a rental yield of 5.25 per cent for at least another year. The $20 million price works out to about $294,000 a room, slightly above the market rate of about $250,000 a room for similar-grade hotels. The property has a lease of 99 years starting from June 1995 and the total gross floor area is about 22,925 sq ft. The rooms go for about $60 to $80 a day. The sale tender comes about eight months after a ban on offering hourly hotel rates was put in place in Joo Chiat. While the area boasts a rich cultural heritage, it has been tainted by vice activities.

Joo Chiat Hotel is one of the nine hotels in the area affected by the ban but Ms Yong said the owner’s decision to sell has nothing to do with the ban. She said the asking price takes into account the limited supply of hotels in the area. Also, the property is near the growth area of Paya Lebar Central and has ‘great potential for the realisation of an improved stream of revenue income and capital appreciation’, she said.The tender closes on Oct 6.