Straits Developments, a subsidiary of conglomerate The Straits Trading Company launched two new property investment products on 10 September 2023 to allow its eligible shareholders to own shares in two high-end Singapore residential properties in its real estate portfolio under its fractionalised investment real estate platform: FIR-ST.
Eric Teng, group COO and CEO of Straits Developments Pte Ltd, says, "FIR-ST is a unique investment product that offers diversification for investors who wish to gain exposure to Singapore residential real estate in bite-sized fractions."
According to Straits Trading, their FIR-ST asset fractionalisation offer investors exposure to a condominium unit in Duchess Residences - a 999-year leasehold development located at 108 Duchess Avenue in Bukit Timah as well as a freehold good class bungalow (GCB) located at 8A Cable Road, Chatsworth Park.
Both properties are offered to Strait Trading Shareholders’ Club registrants only. Shareholders who hold at least 100 shares of Straits Trading can register with the Shareholders’ Club. Registration is free and voluntary for all shareholders. SDPL believes FIR-ST offers advantages over other property-based asset classes because it improves accessibility to high value properties that have high barriers to entry. Moreover, FIR-ST provides exposure to property investment without the hassles associated with property ownership as a Straits Trading unit will be responsible for the administrative work and maintenance of the properties.
What is Asset Fractionalisation?
Asset Fractionalisation process involves dividing the properties into fractions, allowing investors to buy and own a portion of each property at a fraction of their value. Each investor will get a share - or a fraction of the rental income from the underlying property and enjoy any dividends generated by that property, giving them exposure to exclusive GCB and high-quality condominium located in District 10 allowing them a share in the potential appreciation of underlying property.
The innovative investment products offer its Shareholders’ Club registrants, preference shareholder investors exposure to high-quality and exclusive Singapore residential properties at a fraction of its value through preference shares to receive dividends, which will be paid on a semi-annual basis. During the investment period, the underlying properties continue to be owned by the existing owners while investors enjoy a share of the economic returns. At the end of the expected investment period of 5 years, the preference shareholders may enjoy returns which reflect a share in the potential appreciation in value of the underlying property via a special payout. The dividends and special payout are non-guaranteed and subject to the performance.
What properties can investors choose under FIR-ST?
FIR-ST is a unique investment product that offers diversification for investors who wish to gain exposure to Singapore residential real estate in bite-sized fractions.
The first underlying property is a 999 year leasehold condo unit at Duchess Residences located near prestigious schools, like Nanyang Primary School and Hwa Chong Institution. Developed by Duchess Development Pte Ltd, a subsidiary of City Developments Limited (CDL), Duchess Residences is situated in the prestigious District 10 of Singapore, specifically at 81 Duchess Avenue enjoying a prime location in the Bukit Timah area, known for its upscale living and proximity to various amenities. The minimum investment amount for investors to own a share of Duchess Residences under FIR-ST is S$200,000.
The second underlying property is a freehold Good Class Bungalow (GCB) located at 8A Cable Road, Chatsworth Park. With limited supply of approximately 2,800 plots, GCBs are a niche segment of Singapore’s residential property and only accessible by ultra-high-net-worth investors, but through FIR-ST, investors may gain economic exposure to this asset class at a fraction of the property value. The minimum investment amount is S$500,000.
Real estate professional Kiwi Lim felt this may present itself as an innovative solution to enable property investors to enjoy ownership of high-quality properties without having to fork out hefty Additional Buyer's Stamp Duties (ABSD) while allowing them a share in the potential appreciation of underlying properties where dividends are paid on semi-annual basis over the investment period.