Despite its association with affordable food, coffee shops aren't actually affordable to begin with.

One, located at Block 261 Serangoon Central Drive, was recently sold for a whopping $40.5 million, reported Lianhe Zaobao.

This pricey transaction is an addition to the list of high-priced coffee shops we've been seeing of late.

In May last year, a caveat was lodged for the sale of a Yishun coffee shop for $40 million. Prior to that, a coffee shop in Tampines changed hands for $41.6 million.

This particular coffee shop in Serangoon is believed to have been in operation for over three decades.

According to documents from Singapore Land Authority (SLA) obtained by the Chinese daily, the coffee shop has 65 years remaining on its lease. It covers an area of approximately 4,198 sqf, which means its psf price works out to be $9,647.

In comparison, the Yishun coffee shop's psf price was at $9,361 while the Tampines coffee shop's $6,964.

Chairman of the Kheng Keow Coffee Merchants Restaurant & Bar-owners Association Kenneth Lee likened the rising prices of resale coffee shops to HDB flats and expects this trend to continue.

With regards to the Serangoon coffee shop, Lee believed the buyer is planning long-term business in the area as it would be hard to sell the former due to its hefty purchase price.

Factors leading to high prices

Nicholas Mak, chief research officer of property portal Mogul.sg, provided his analysis for reasons behind the resale price of this coffee shop.

Unsurprisingly, location was key.

This coffee shop is located next to a main road and is a five-minute walk to Serangoon MRT station and Nex shopping mall.

A lack of competition nearby, in the form of large coffee shops, was also beneficial, he told Zaobao.

An interesting aspect of the coffee shop is that it houses a rare KFC fast food stall, among the 10-over stalls there. 

Mak believes this adds a pull factor with students from nearby schools dropping by for a meal.

While the coffee shop was sold at a high price, Mak does not immediately equate that with prices of food inevitably shooting up.

This is because food prices must match the market price and stall owners cannot increase it too much.

A retiree and regular customer of the coffee shop felt that increasing the price of food is understandable but hopes it would not be too much.

An unnamed stall owner told Zaobao that he was aware of the sale but even if the new owner increases the rent, he has no plans to raise the price of his food.

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amierul@asiaone.com

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