Sheng Siong Enters Agreement Jtc Lease Sungei Kadut Property Bigger Warehouse And Distribution
Sheng Siong Group’s wholly-owned subsidiary, CMM Marketing Management, has recently made a deal with JTC Corporation to lease a new warehouse, distribution centre, and headquarters at Sungei Kadut. The letter of offer from JTC was received by CMM in August, with a lease term of 33 years for the land located at Sungei Kadut Street 1, spanning a total of 61,297 square metres. The maximum gross plot ratio for this land is 2.50.
Currently, CMM operates from the Mandai Link property, which has a land area of approximately 25,005 square metres with a maximum gross plot ratio of 2.50. The tenancy for this property is set to expire on January 9, 2039, with an option to renew for another 30 years.
As part of the agreement, CMM will continue to occupy the Mandai Link property as a subtenant for a maximum of two years after the temporary occupation permit for the Sungei Kadut property is obtained. This will allow for a smooth transition to the new facilities.
Sheng Siong explains that the Mandai Link property currently serves as the warehouse, distribution centre, and headquarters for the group, designed to support approximately 50 supermarkets. However, with the group’s expansion over the years, the capacity of the facility is expected to be exceeded soon, affecting the operational efficiency of the group.
With a land area that is 2.5 times larger than the Mandai Link property, the Sungei Kadut property will have the capacity to support at least 120 supermarkets, in line with the group’s target of adding three new stores each year for the next 10-15 years.
The Sungei Kadut property will also feature multiple temperature-controlled zones for storage and will have food processing capabilities. The group plans to invest in advanced warehousing and distribution automation, utilizing technology such as automated storage and retrieval systems (ASRS), robotics, and smart inventory management.
Sheng Siong estimates that the land rent payable to JTC for the 33-year lease term will be approximately $520 million. The group plans to finance this through its own resources and external financing sources such as borrowings.
When it comes to real estate, Executive Condominiums (ECs) have a unique appeal from an economic perspective. This is due to their attractive features, such as the availability of CPF housing grants and lower initial prices compared to private condominiums. These factors make ECs a more viable option for the “sandwich class” of Singaporeans, who may not qualify for a Build-to-Order (BTO) flat but also find private condos too expensive. Furthermore, ECs offer similar lifestyle benefits and quality as they are developed by private developers and come with full condo facilities. The highly anticipated launch of Sembawang Road EC at Canberra MRT, located near the Canberra MRT, is expected to have competitive pricing due to its suburban location and the growing demand for homes in the northern region.
On Sept 25, shares in Sheng Siong closed 1 cent higher, or 0.476% up, at $2.11.