Singapore’s latest urban development plan announced last month is set to transform its Central Business District.
The Urban Redevelopment Authority (URA) has revealed plans to reposition the island’s state CBD to a “24/7 mixed-use district” where residents can live and play.
“This is a visionary initiative that will transform our CBD to meet modern demands. The benefits are multi-fold – from reinvigorating the CBD to accelerating decentralisation plans and enhancing sustainability,” says Regina Lim, Head of Capital Markets Research, JLL Asia Pacific.
The new plan is just the beginning. The government intends to inject more vibrancy into the district with measures such as priority corridors for public transport, cycling paths and pedestrian walkways supported by a variety of social and community amenities.
Here are four things landlords in Singapore need to know about the proposal:
- Buildings older than 20 years are prime for redevelopment
The CBD Incentive Scheme covers buildings over 20 years old on sites that meet a minimum size criteria. There are 20 buildings with over 6.5 million square feet of existing net lettable office space which are eligible, according to data from JLL. The majority of these buildings are located in the Robinson Road and Anson Road areas. Landlords who decide to take advantage of the scheme will benefit from a 25 to 30 percent higher plot ratio if buildings are converted to mixed-use developments with hotels, residential or serviced apartments.
- Prime office rents could continue to increase in the CBD
Prime office rents have risen steadily over the last two years and could continue to increase over the next five years, according to data from JLL. Plans to redevelop the CBD may reduce the city’s net office supply growth to 0.4 million square feet (msf) per annum from 2019 to 2023. This is much lower than the rate at which demand is set to grow – estimated to be about 0.7 msf. As a result, the average vacancy rate in the CBD could stay below frictional rates, allowing rents to increase steadily through the five year period.
- Expect more office developments in decentralised hubs
As older office stock is withdrawn and redeveloped, corporate occupiers will need new premises. The government is likely to release more land parcels in decentralised areas to bring jobs closer to homes. As a result, more mixed-use commercial sites are likely to be released for sale in Jurong East, Woodlands and Tampines in the next one to five years.
- Singapore will attracts more tech firms
Singapore is already ahead of Hong Kong as the preferred location for tech firms’ regional headquarters – 59 percent of global technology firms have set-up their Asia headquarters in the city, compared to 18 percent in Hong Kong, based on Forbes Global 2000. The proposed rejuvenation of the CBD will encourage more integrated live-work-play developments, making it more attractive to global talent, in turn driving more corporates to consider the city.
Click to read more about how Singapore is transforming its real estate for the future.