The once sleepy Beach Road area is undergoing a dramatic makeover as property giants roll in with ambitious plans for a series of mixed developments.
Three new integrated projects are already on the go, with at least one more to come following the release of a new site in the Government Land Sales programme last week.
The commercial and residential plot, which came from the reserve list, can accommodate a 45-storey complex of 947,223 sq ft.
The 2ha plot will go to tender only if a developer first submits a bid price acceptable to the Urban Redevelopment Authority (URA).
It is estimated to cost from $1.1 billion to $1.4 billion - or $1,300 to $1,400 per sq ft (psf) per plot ratio.
The historic site between Beach and Rochor roads - it was the home of Beach Road Police Station - will bring more office space to an area that has long had a shortage of such space, said experts.
The developer that clinches the site must conserve and restore the former police station building and set aside at least 70 per cent of the new complex for offices.
The development can have a residential portion as well.
"The development of the new site, if it happens, will help complete the development along that strip, offering a more contiguous streetscape," said Dr Chua Yang Liang, head of South-east Asia research at JLL.
Meanwhile, developers are forging ahead with plans for other mixed-use projects.
South Beach, Singapore's largest mixed development, will be fully completed by the end of next year, said City Developments this week.
It will feature a luxury hotel and 190 residential units, ranging from 950 sq ft two-bedders to 6,500 sq ft five-bedroom penthouses.
Tenants like Rabobank have already committed to lease 30,000 sq ft of office space.
South Bank plus the DUO by developer M&S and World Class Land's City Gate, both launched in the past year, will add at least 1.25 million sq ft of commercial space to Beach Road.
"The rejuvenation of this area into a vibrant commercial hub is very important, because of its central location," said Mr Ong Kah Seng, director of R'ST Research.
"It would be an opportunity cost to the Government and stakeholders in the area to allow the area to remain at status quo and underdeveloped."
Mr Ong expects the new developments to lift property prices by about 2 per cent.
However, investors will find it hard to get their hands on commercial units.
The few available tend to be in older properties such as Golden Mile Tower and The Plaza, as developers are keen to keep hold of any new space they build.
So far, only City Gate has new strata-titled commercial units. It has sold 62 of its 188 new shop units for an average of $4,202 psf since July, according to caveats lodged with the URA.
But there is certainly money to be made by investors.
A 431 sq ft office at The Plaza, a strata-titled project at the corner of Beach and Ophir roads, changed hands at $1,881 psf in April for a profit of $76,112 in over just 15 months.
Over at Golden Mile Complex, a 441 sq ft commercial unit sold at $1,869 psf last month, for a profit of $273,550. It was bought in July 2007.
Monthly rents at these older developments are estimated at $5.50 psf, while "Grade A" offices in the area could fetch $7.50 psf.
However, commercial rents at upcoming projects could be up to 20 per cent higher once they are completed in the next two to three years, said Mr Ong.
Source: Straits Times, 8 Dec 2014