Renewal In Singapore’s CBD; New Housing Options In The Offing

August 29, 2022

Renewal is taking place in the CBD with the URA having received 12 outline applications under the CBD Incentive Scheme (CBDI), of which eight have been given in-principle approval as at April 5, 2022

Renewal is occurring throughout Singapore's existing CBD, particularly in the Tanjong Pagar neighbourhood. The extension of the CBD to the Beach Road-Bugis area has resulted in a rush of redevelopments and new mixed-use complexes. As part of the URA's Long-Term Plan Review, the government has set its eyes on developing the southeast — Marina South, Marina East, and Straits View — with Marina Bay being defined as the new downtown.

The URA intends to transform Marina South, Marina East, and Straits View into "attractive live-work-play environments combined with efficient transportation and superior infrastructure." And it is doing so by leveraging the city-core state's strengths — "waterbodies and vegetation."

According to Desmond Sim, CEO of Edmund Tie, the development of Marina South, Marina East, and Straits View will promote the city's continuous growth as part of the Greater Southern Waterfront. "The government's objective is to make the CBD a beautiful location to live, work, and play," Sim says, commenting on the CBD plans as part of EdgeProp Singapore's NDP Master Plan Master Class webinar series on August 20.

The Marina South precinct is adjacent to Gardens by the Bay and overlooks the Marina Reserve and the Singapore Straits. Marina South, which sits on a 45-hectare site, has the potential to produce over 10,000 dwelling units, as well as office, retail, hotel, and other amenities.

Sitting on a 45ha site, Marina South has the potential to yield over 10,000 dwelling units, supported by office, retail, hotel and other amenities (Photo: Samuel Isaac Chua/EdgeProp Singapore)

First Residential Site In Marina South

As part of the 2H2022 Government Land Sales (GLS) programme, the first residential construction site in Marina South was issued. The 12,300 sq m (132,397 sq ft) site at Marina Gardens Lane, with a plot ratio of 5.6, can provide about 795 residential units and a 750 sq m (8,073 sq ft) commercial space on the first level. The 99-year leasehold property is planned to go on the market in December 2022.

The URA's objective is to build additional residences in the CBD, allowing residents to live closer to their workplaces as well as the city's lifestyle and recreation resources. "The Marina Gardens Lane location is primarily residential," Sim explains. "It's part of a larger goal to include more work, live, and play components in the CBD." More sites in Marina South are expected to be released in the future, depending on developer take-up of this first GLS site, he says.

As part of the Master Plan 2019, the URA introduced the CBD Incentive Scheme with bonus plot ratio for developers to stimulate the development of more mixed-use schemes with a diverse variety of complementary applications to support a live-in population in the CBD. It is part of the URA's ambition to develop a "vibrant business sector around the clock." In addition, the URA implemented the Strategic Development Incentive Scheme to encourage the rehabilitation of older buildings in strategic places.

The CBD Incentive Scheme allows for higher plot ratios of 25% to 30% for qualified office buildings that were built more than two decades ago and are being transformed into mixed-use developments. As of April 5, the URA had received 12 outline applications under the CBD Incentive Scheme, eight of which had been approved in principle. Meanwhile, the URA has received and approved four outline applications under the Strategic Development Incentive Scheme.

Maxwell House will be redeveloped into a new mixed-use development with about 330 residential units and a 46,000 sq ft commercial podium.

Upcoming Mixed-Use Developments With Residences

Four new mixed-use complexes are scheduled to open next year. One of these is the Maxwell House renovation by a group comprised of Chip Eng Seng Corp, SingHaiyi, and Chuan Investments. In May 2021, the partnership paid $276.8 million for the site as a whole. According to Chip Eng Seng, the new building will be 80% residential and 20% commercial, resulting in a new high-rise tower with 330 condominium flats and 46,000 square feet of retail space.

Meanwhile, City Developments has announced plans to rebuild the freehold Fuji Xerox Towers into NewPort Residents, NewPort Plaza, and NewPort Tower, a new mixed-use development including residences, serviced apartments, and offices. The 246-unit NewPort Residences are set to open in the first half of 2023.

The former Fuji Xerox Towers will be a new mixed-use development with residential, serviced apartments and offices, called NewPort Residences, NewPort Plaza and NewPort Tower respectively

In-principal approval has also been granted to Alibaba and a consortium led by Perennial Holdings for the reconstruction of the former AXA Tower at 8 Shenton Way. The new 63-story tower will house offices, hotels, and residences.

Tower received in-principle approval under the CBDI scheme for redevelopment into a 63-storey tower with residences, office and hotel.

The largest future residential project in the neighbourhood will be IOI Properties' new Marina View property. The 84,110-square-foot plot may offer 905 residential units and 540 hotel rooms. When the 99-year leasehold GLS site was put up for sale in June of last year, IOI Properties was the sole bidder. The property was bought for $1.508 billion.

The Marina View site purchased by IOI Properties for $1.508 billion can be developed into a new 905 unit residential project with a 540-key hotel

The 290m Guoco Tower, which is linked with the Tanjong Pagar MRT Station, is located in the Tanjong Pagar neighbourhood. Guoco Tower is crowned with the 181-unit luxury condominiums, Wallich Residence, which spans the 39th to 64th floors. The highest psf price obtained at Wallich Residence was $17.5 million or $4,987 psf for the sale of a 3,509 sq ft, four-bedroom flat on the 61st floor, completed in 2017. Based on caveats recorded with URA Realis to date, the average price of units sold at Wallich Residence is $3,420 psf.

One Bernam, a mixed-use complex with 351 residential units and a 15,726 sq ft commercial podium, was recently completed nearby. It is also a five-minute walk from Tanjong Pagar MRT Station. MCC Land and Hao Yuan Investments launched the project in May of last year as a joint venture. To date, 35% of the units have sold for an average price of $2,470 per square foot.

Accommodating Flexible Work Options

While the average household size in Singapore has fallen, there is no yearning for smaller residences. According to Sim, smaller homes are the result of decreasing family sizes, singles choosing to live on their own, and empty nesters.

People who work from home, on the other hand, have a preference for larger space. According to Sim, "our living spaces and surroundings must also accommodate other future trends, such as an ageing population, flexible work arrangements, e-commerce, smart technology, and climate change." "If the population continues to increase at its current rate, we will require additional housing in the future."

CBD Rents and Vacancy Rate (Source: Edmund Tie Research)

Office space, in addition to dwellings, will need to be adjusted to suit flexible work arrangements. According to URA, 38% of those polled want a flexible work arrangement for more than half of the time. Another 53% want to work closer to home, with a commute of two MRT stations or less, while 12% prefer to work in the City Centre.

Despite the growth of regional centres as a second CBD in Woodlands, Paya Lebar, Tampines, and Jurong Lake District, Sim adds that "the City Centre will continue to remain crucial to anchoring Singapore as an international corporate and financial powerhouse."

CBD Residential Resale Values (Source: Edmund Tie Research)

The City Centre is undergoing renovation to include additional prime office space, a live-in population, a variety of complementing services, and improved accessibility via the MRT network. According to Sim, this will contribute to the CBD and City Centre becoming "a round-the-clock dynamic commercial district for work, live, and play."

"Capital values have increased as a result of improved occupancy and rental rates for Grade-A office buildings in the CBD," he adds.

URA is also considering a number of leasing options for particular sites in order to meet changing demands and facilitate future revitalization projects in specific areas. "Having some sites with shorter tenures would also allow us to refresh our land uses in quicker cycles," Sim says.

Credits: EdgeProp Singapore

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