Fragrance Group puts revamped Verdun House on the market for $82 mil

Verdun House, a four-storey freehold building at the corner of Verdun Road and Sam Leong Road, has been launched for sale by expression of interest (EOI). Cushman & Wakefield (C&W) is the appointed exclusive marketing agent.

Built in the 1980s, Verdun House comprises four strata-titled shops on the ground floor and 12 strata-titled apartments across the three upper floors. It spans 6, 8, 10 and 12 Verdun Road.

The building occupies a regularly shaped freehold plot of 7,316 sq ft and has an existing gross floor area (GFA) of 22,730 sq ft. Zoned commercial under the URA Master Plan 2025, the site can accommodate up to 30,728 sq ft of GFA based on the maximum permissible plot ratio of 4.2. No development charge is payable for the additional floor area.

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Property mogul and executive chairman of Fragrance Group James Koh bought Verdun House en bloc in April 2022 for $55.1 million, or $1,793 psf based on the maximum permissible GFA.

According to C&W, Fragrance Group launched the EOI after Koh received unsolicited offers for the building, including interest from a co-living operator.

From strata apartments to co-living

Rather than redevelop Verdun House after the acquisition, Koh chose to refurbish and reposition the existing building.

The 12 apartments were reconfigured for co-living, with each unit comprising four to six bedrooms, a shared living and dining area, a communal kitchen and two common bathrooms positioned at opposite ends of the apartment. New partition walls, windows, and doors were installed.

The air-conditioning, plumbing, sanitary and electrical systems were also overhauled, while the lifts were upgraded. Leasing began only after the refurbishment was completed, allowing the upgraded units to command higher rents.

In mid-2023, accommodation and property management company MetroResidences became the master tenant and operator of the co-living accommodation on the upper floors.

Read also: City Square Mall completes $50 mil revamp

Its five-year lease runs until mid-2028, allowing a new owner to enjoy immediate rental income, C&W director of capital markets Sophia Lim says.

Online listings show monthly rents ranging from $1,700 for an individual room to between $8,900 and $9,000 for an entire six-bedroom apartment. Occupancy is well above 90%, Lim adds.

From jewellery to chicken rice

The ground-floor shops have been progressively leased since mid-2023 and are now fully occupied.

The newest tenant, jewellery store Aswad Gold & Diamond, opened on July 10. Next door, Indian restaurant Kumar Mess – Flavours of Madurai opened its third outlet at Verdun House in February.

The Coffee Bean & Tea Leaf opened a 24-hour outlet in November 2023, followed by fast-casual eatery Sam Leong Street Chicken Rice in January 2024.

The latter occupies a corner unit with a nostalgic link to the neighbourhood. The original Sam Leong Street Chicken Rice hawker stall operated just a few steps away from 1992 to 2023. After its founder's death, F&B group Putien revived the brand as a sit-down restaurant at Verdun House.

Draw for students and young professionals

Located in the Farrer Park neighbourhood of District 8, Verdun House is a five- to eight-minute walk from Farrer Park MRT Station on the North-East Line and Jalan Besar MRT Station on the Downtown Line.

Read also: Two adjoining shophouses at Jalan Besar for sale at $9.2 mil

Farrer Park station is two stops from Dhoby Ghaut interchange, which sits within easy reach of the Bras Basah-Bugis arts and heritage precinct. The precinct is home to tertiary institutions including Singapore Management University, School of the Arts, Nanyang Academy of Fine Arts and Lasalle College of the Arts.

Farrer Park's accessibility makes the area popular with international students studying at these institutions, says Lim.

Young professionals are another source of rental demand, attracted by the area's retail, dining and healthcare amenities, including City Square Mall, Centrium Square and Farrer Park Hospital, she adds.

Tourism and healthcare demand

Little India and Mustafa Centre also draw tourists to the area, while healthcare provides another source of demand for accommodation.

Farrer Park Hospital, Connexion — Singapore's first integrated healthcare and hospitality complex — and Raffles Hospital are all within easy reach.

"Most of these medical tourists will generally prefer to stay in the hotels nearby," says Lim. "But if they need to stay for an extended period due to their medical treatments, most would choose apartments or co-living spaces in the area."

She says Verdun House's existing co-living layout could also be further optimised.

Multiple ways to unlock value

At the $82 million guide price, Verdun House offers a gross rental yield of nearly 3%, Lim estimates. That compares with yields of 1% to 2% for freehold shophouses today, she says.

Shaun Poh, C&W's executive director and head of capital markets, says the building's appeal lies in the range of strategies available to investors. Its existing tenancies provide immediate rental income, while its commercial zoning permits a broad mix of uses and creates scope for asset enhancement, intensification or redevelopment.

The zoning could also widen the pool of potential buyers to include foreign investors and co-living operators, he notes, as purchasers would not incur the additional buyer's stamp duty (ABSD) applicable to residential property.

Based on the maximum plot ratio of 4.2, the site could eventually be redeveloped into a new six-storey commercial building. The guide price translates to $2,669 psf based on the maximum permissible GFA of 30,728 sq ft.

"Verdun House is well positioned to attract investors seeking both income resilience and capital appreciation," says Poh.

The EOI closes on Sept 21.

Check out the latest listings for Verdun House, Farrer Park, District 8 properties