Keong Saik Road’s second wave of gentrification

IN early March, Chinatown Hotel on Teck Lim Road was put up for sale. The 42-room boutique hotel is located off Keong Saik Road in the Chinatown-Bukit Pasoh area. The owners have been operating the hotel for the past 25 years.

“They felt it was time to let go of the property and focus on their other businesses,” says Shaun Poh, Cushman & Wakefield execu­tive director of capital markets, who is handling the sale by expression of interest. The indicative price for Chinatown Hotel is S$40 million, or about S$952,000 a room, and the expression of interest will close on March 28.

Interest in the property has been strong, notes Poh, as it is rare for three adjoining freehold conservation shophouses with approval for use as a hotel to be put on the market for sale. The new owner has the option to continue running the property as a hotel, “which is the highest and best use”, according to Poh. Alternatively, the new owner can convert the upper floors of the 3½-storey shophouses into offices and turn the ground floor units into F&B use.

Just around the corner, on Keong Saik Road, is the iconic, triangular pre-war shophouse headlined by Potato Head Folk, ­featuring ­inter­national cuisine in a three-­storey conservation building with a rooftop garden.

Foodies’ haunt

Adjacent to it is a three-storey shophouse that has been put on the market for sale. The first level of the shophouse is currently tenanted to a Jin Fu Cheng Bak Kwa seller, who will be vacating the unit in July. The upper floors have been leased to Potato Head Folk to be used as its office. The freehold pre-war shophouse has a built-up area of 2,800 sq ft and sits on a land area of 1,067 sq ft. The ­asking price is S$9.8 million (S$3,000 psf). Knight Frank and Cushman & Wakefield are jointly marketing the property. The shophouse will be sold with vacant possession. It has been in the possession of the Neo family for more than a decade now, and the two brothers who are holding the asset have decided to sell it. They intend to redeploy the cash for other investments or business ventures, says Cushman & Wakefield’s Poh.

“There are few places in the CBD fringe that offer this unique charm of having ­offices, boutique hotels, hip restaurants and cafes, local coffee shops, as well as an ­Indian and a Chinese temple,” says Mary Sai, Knight Frank exe­cutive director of investment and capital markets. “As the revitalisation of ­Keong Saik Road progresses, it could be the next Tiong Bahru or Holland Village with its eclectic mix of F&B, work and hospitality offerings all in one place.”

Keong Saik Road is now a popular ­foodies’ haunt. Besides Potato Head Folk, there are ­other eateries such as Man Man ­Japanese ­Unagi Restaurant, Bread & Hearth artisan ­bakery and ­coffee shop, Esquina Spanish ­tapas bar, and Burnt Ends, featuring modern ­Australian barbecue.

Traditional eateries include local coffee shop Tong Ah Eating House featuring kaya toast and coffee, Yanti Nasi Padang and Foong Kee ­Coffeeshop, which specialises in roast ­chicken, duck and served with rice and noodles.

“In the morning, you can see office ­workers and residents queueing up at Tong Ah for their toast and coffee, as well as at Bread & Hearth for freshly baked breads and buns,” says ­Cushman’s Poh.

First wave of gentrification

But things had not always been this way. For much of the 1960s to the 1990s, Keong Saik was known as the red-light district of Chinatown before undergoing a series of gentrification. Bounded by Neil Road, Kreta Ayer Road and Bukit Pasoh Road, “Keong Saik Road was once a forgotten part of Chinatown”, says Knight Frank’s Sai.

What really sparked a rejuvenation 14 years ago was the opening of the 32-room Hotel 1929, reckons Poh, who happened to have a hand in how the boutique hotel came to be. In 2002, when he was the auctioneer at DTZ (now Edmund Tie & Co), he sold a row of five shophouses on ­Keong Saik Road in a mortgagee sale. The property was snapped up for S$3.4 million by former lawyer Loh Lik Peng.

Hotel 1929 was the flagship property of Loh, now a successful hotelier-restaurateur operating under his own company, Unlisted ­Collection. Today, his portfolio of hotels includes the New Majestic at Bukit Pasoh and Wanderlust in Little India, both here; Town Hall and 196 Bishopsgate in London; as well as The Waterhouse at South Bund, Shanghai.

Loh opened Hotel 1929 in February 2003 after spending close to S$2 million sprucing up the shophouses. He also tied up with executive chef Sebastian Ng to start Restaurant Ember at the hotel. “That was when people [began to take] notice of the Keong Saik area,” notes Poh. “In a way, Loh kick-started the gentrification of Keong Saik Road.”

The success of Hotel 1929 led to the rejuvenation of The Royal Peacock Hotel. The 79-room hotel across the road opened in 1995, and was then owned by Grace International, headed by Geeson Lawadinata, the ­scion of an Indonesian family trading business. Grace International also owns The Scarlet, an 84-room boutique hotel on Erskine Road, off Ann Siang Hill.

The Royal Peacock Hotel was rebranded The SAFF in 2010 and subsequently sold to Naumi Hotels for S$42 million, or about S$532,000 a room in September 2011. Naumi Hotels is owned by the Jhunjhnuwala family, who also own the Naumi Hotel on Seah Street.

In 2011, a new boutique hotel, Park 22, opened right next door to Chinatown Hotel on Teck Lim Road. The 56-room Park 22 sits on three adjacent shophouses and is owned and operated by White Oak Investments, a Singapore-based hospitality management and investment firm.

Second wave of gentrification

In September 2013, Loh sold Hotel 1929 for S$35 million. However, under a leaseback arrangement, he continues to operate the hotel and its in-house Restaurant Ember. He recently brought in new executive chef Alex Phan, a nominee for Rising Chef of the Year at the World ­Gourmet Summit 2016, to helm Ember.

The buyer of Hotel 1929 is ­reportedly Cheong Keng Hooi, a member of the Cheong family who developed ­International Plaza and owns ­Singapore-listed Hong Fok Corp. Cheong is also related to ­luxury property developer Simon Cheong of SC Global Developments.

The S$35 million price tag for Hotel 1929 translated to S$1.09 million per key and set a new benchmark for hotel transactions. It ­surpassed the price of the former 49-room Berjaya Hotel (renamed The Duxton) on Duxton Road that was sold for S$50 million or S$1.02 million per key in May 2013.

The sale of Hotel 1929 sparked another wave of rejuvenation at Keong Saik Road, notes Poh. And with Chinatown Hotel on the market now, interest has returned to the area.

Besides Loh, another entrepreneur instrumental in the remaking of Keong Saik is Ben Gattie of The Bamboo Group and The Working Capitol, which he co-founded with his sister, ­Saranta. ­Gattie bought the former AIA ­Building on 1 ­Keong Saik Road and ­converted the row of five ­shophouses into co-working space The Working ­Capitol, with a café on the first level ­jointly owned and managed by Lo & Behold Group.

The Working Capitol on Keong Saik opened in April 2015 and is running at full ­capacity with about 350 members working out of its ­premises. Owing to demand, Gattie had to expand to the second floor of the conservation shophouse across the road, above the coffee shop.

One of his tenants at Keong Saik Road is ­Rutgers Business School Asia Pacific, which runs an executive MBA programme there. Gattie also introduced new F&B concepts to Keong Saik by bringing in tenants such as Man Man Japa­nese Unagi Restaurant, Neon Pigeon Izakaya and Potato Head Folk. “In a lot of cases, it was about bringing in first-of-its-kind F&B operators,” Gattie says.

“Keong Saik is not a traditional office location. But we thought it was ready for this [The Working ­Capitol], and we just loved the property. We already had some projects down the road and we’re part of the social fabric here.”

This article first appeared in The Edge Property Singapore, a pullout of The Edge Singapore, on March 27, 2017.

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