Why Integrated Developments Command A Price Premium

August 23, 2022

People are more likely to pay a premium for mixed-use developments that include an MRT station. What makes integrated developments appealing? An integrated development, according to Alice Tan, head of consultant at Knight Frank Singapore, is a mixed-use development having a residential component and a large commercial component that is smoothly connected to a transportation hub and public areas.

"In general, when integrated developments are launched, developers will build a 20% to 25% premium over other private condos in the same area," says Tan, who spoke on August 13 at the EdgeProp Singapore NDP Master Plan Master Class webinar series, which featured the Beach Road-Bugis area and the Lentor area.

Two 1,808 sq ft four-bedroom units with a combined area of 3,616 sq ft on the 29th and 30th floors of Midtown Modern was sold for $17 million in July 2022. The highest psf price achieved was for the 1,808 sq ft unit on the 30th floor - at $4,783 psf last month (Picture: GuocoLand)

New Luxury Offerings

Based on caveats lodged, two four-bedroom units on the 29th and 30th floors of Midtown Modern in the Beach Road-Bugis region set new psf price highs of $4,617 psf and $4,783 psf when they were sold in July. The two units of 1,808 square feet each can be combined to form a duplex, five-bedroom penthouse of 3,616 square feet. The 29th-floor unit sold for $8.35 million, while the 30th-floor unit sold for $8.65 million, for a total of $17 million.

The duplex penthouse is one of six such residences at Midtown Modern, which debuted in early July as part of GuocoLand's Sky Bungalow Collection. Previously, the lone penthouse, a 3,520 sq ft, five-bedroom simplex, sold at launch for $14.83 million ($4,213 psf).

Midtown Modern is underground connected to the Bugis MRT Station, which serves as an interchange for the Downtown and East-West Lines. The 558-unit Midtown Modern is an addition of the adjacent Guoco Midtown integrated complex. The $2.4 billion figure Guoco Midtown includes a 30-story Grade-A office tower, a five-story Midtown Hub for social and professional networking, 33,000 square feet of retail and food and beverage space, and the 219-unit Midtown Bay, which features Soho-style apartments. In addition, the complex has over 30 themed gardens and manicured spaces totaling 3.8ha. GuocoLand is developing Midtown Modern in collaboration with Hong Leong Holdings and Hong Realty.

Guoco Midtown's expansion has also sparked neighbourhood revitalization. Shaw Tower, a historic mixed-use commercial building with offices and theatres constructed in 1975, will be demolished in 2020. A new 450,000 sq ft Grade-A office tower with five stories (15,700 sq ft) of retail and F&B is under construction.

Construction of the upcoming 558-unit Midtown Moder at Tan Quee Lan Street in the Beach Road-Bugis neighbourhood (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Renewal, New Psf Price Highs

Wing Tai Holdings proposed 522-unit The M will be located on Middle Road, just across Shaw Tower. Following its February 2020 debut, the project is 93% sold. According to a caveat lodged in September 2021, the highest psf price attained in the development is for a 614 sq ft, two-bedroom flat on the 19th level that sold for $1.862 million ($3,035 psf).

UOL Group is constructing a new seven-story building at 333 North Bridge Road, which it purchased for $79.3 million in December 2019. It will be a continuation of UOL's Odeon Towers. The structure is directly across from the Raffles Hotel, which reopened in late 2019 following a two-year refurbishment.

South Beach, an integrated complex completed in 2016, is located on the other side of Shaw Tower. It has two 42- and 45-story towers, one with Grade-A office space and the other with the 634-room JW Marriott Hotel on the first 22 floors and 190 luxury apartments, South Beach Residences, from the 23rd to the 45th. The development includes retail and F&B on the first and basement levels and is connected to the Circle Line's Esplanade MRT Station.

South Beach Residences debuted in 2018 with pricing beginning at $3.5 million, or $2,795 per square foot, for a 1,216 sq ft, two-bedroom home. Prices peaked at $4,748 per square foot in October 2021, when a 3,897 sq ft, three-bedroom penthouse on the 42nd floor sold for $18.5 million.

Duo by M+S, a joint venture between Singapore's Temasek Holdings and Malaysia's Khazanah Nasional, the respective sovereign wealth funds, is another large integrated development in the Beach Road region. The 39-story Duo Tower, completed in 2017, includes 568,412 sq ft of Grade-A office space, with the top 15 levels occupied by the 342-room Andaz Hotel. Duo Residences, a 49-story residential tower, with 660 units and is currently sold out.

Launched in November 2013, units in the 99-year leasehold Duo Residences were sold at an average price of $1,969 psf. Units sold in 2021-2022 to date have achieved prices averaging $2,110 psf, based on caveats lodged.

GuocoLand is developing the 186,001 sq ft, 99-year leasehold site into the 605-unit Lentor Modern in the new Lentor Hills Estate, which is targeted for launch in September (Photo: Samuel Isaac Chua/EdgeProp Singapore)

New Suburban Enclave

With each new launch, the Beach Road-Bugis area has seen new integrated complexes set new pricing benchmarks for apartments. Is the same kind of price increase likely in a suburban enclave like Lentor Hills Estate off Yio Chu Kang Road?

According to a recent consumer survey conducted by EdgeProp Singapore, 79% of the 1,247 respondents preferred a non-central location with strong connection (for example, easy access to an MRT station) over a central site with low connectivity (not within walking distance of an MRT station).

Similarly, 81% of those polled preferred a non-Central position on top of a mall to a Central location not within walking distance of a mall. As a result, people place greater value on convenience and connectedness than on having a Central or non-Central home location.

Could GuocoLand recreate its success with Guoco Midtown and Midtown Modern at the upcoming Lentor Hills estate? GuocoLand was awarded the tender for the Government Land Sale (GLS) site at Lentor Central in July 2021 with a bid of $784.1 million, or $1,204 per plot ratio (psf ppr).

The 186,001-square-foot, 99-year leasehold site is being developed by the developer into the 605-unit Lentor Modern, which is set to open in September. The homes will be split across three 25-story towers on top of a 96,000 sq ft retail complex, which will include a 12,000 sq ft supermarket, a 10,000 sq ft childcare centre, services, F&B outlets, and other facilities. The project will be integrated with the Thomson-East Coast Line's future Lentor MRT Station.

The Lentor Central site is in the Thomson and Yio Chu Kang region, which is a private housing estate dominated by landed residences. It is also close to nature parks and reserves, such as Thomson Nature Park and Lower Peirce Reservoir Park.

Lentor Modern will be the only integrated development there, and its launch is likely to set a new benchmark for the new neighbourhood and will be linked directly to the Lentor MRT station (Photo: Albert Chua/EdgeProp Singapore)

‘Only Integrated Development In Lentor’

Meanwhile, the neighbouring Lentor Hills Road (Parcel A), a 144,744 sq ft, 99-year leasehold site, was sold in January 2022 to the highest bidder, a consortium comprised of Hong Leong Holdings, GuocoLand, and TID (a joint venture between Hong Leong Holdings and Mitsui Fudosan), for $586.6 million ($1,060 psf ppr). Lentor Hills Residences, a 600-unit residential development, is anticipated to be built on the site.

In May of this year, the government revealed three more GLS sites in the Lentor region planned for residential development: a land parcel at Lentor Central, Lentor Gardens, and Lentor Hills Road (Parcel B) are available under the 1H2022 GLS programme. According to URA, the three GLS sites might provide around 1,265 residential units.

While the sites at Lentor Central and Lentor Hills Road (Parcel B) have been put up for public tender on the Confirmed List, the Lentor Gardens land parcel is on the Reserve List, which means it will only be put up for sale if a developer submits an offer that satisfies an acceptable minimum bid to URA.

Lentor Modern appears to be the only integrated construction there, and its completion is expected to set a new standard for the new neighbourhood.

Other nearby condominium developments include the 421-unit The Calrose on Yio Chu Kang Road and the 362-unit Far Horizon Gardens on Ang Mo Kio Avenue 9. The Calrose, a five-story freehold development, debuted in May 2005 and was finished in 2007. Far Horizon Gardens, on the other hand, was completed in 1986. As a result, The Calrose was the last new project to open in the neighbourhood 17 years ago. The Calrose resale sales in 2022 ranged from $1.452 million ($1,569 psf) for a 926 sq ft unit to $2.768 million ($1,292 psf) for a 2,142 sq ft penthouse unit.

According to caveats filed in July, Far Horizon Gardens, which has a 99-year lease since 1982, has seen apartments change hands this year at prices ranging from $1.165 million ($902 psf) for a 1,292 sq ft unit to $1.125 million ($977 psf) for a 1,152 sq ft unit.

Credits: EdgeProp Singapore

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