Analysts suggest that future launches of land supply be carried out with an eye on overall demand and supply
THE Jurong Lake District (JLD) is seen as having the right ingredients to become Singapore's second central business district, but its planning cannot be done in isolation from other growth areas and the core CBD, market watchers say.
JLL head of research and consultancy Tay Huey Ying said, for example, that given Singapore's small economy and the lack of hinterland to support demand for office space, it would be better to focus efforts on developing a few, instead of many, growth areas at a time.
"This approach will facilitate the building of a critical mass of supporting businesses and amenities, as well as live-in population - all of which are important locational criteria for businesses," she said.
Agreeing, Cushman & Wakefield research head Christine Li said that it was critical to pace future launches of land supply so that it is in sync with demand.
Going by the standard space provision of 90 square feet per worker, some nine million sq ft of new office space may be needed to house 100,000 workers. The government plans to create 100,000 new jobs and add 20,000 new homes in JLD, but this would mean increasing the office stock in Jurong by more than five times from the current 1.6 million sq ft, she estimated.
There is also the question of whether the Urban Redevelopment Authority (URA) will cut back on the future supply of land parcels in Marina Bay - these can generate another 10 million sq ft of office space - to reduce the risk of an oversupply of such space island-wide, she said.
The retail components in the mixed-use area of JLD may prompt landlords of existing malls in Jurong to consider revamping their tenant mix in the future, she added.
Tampines, Singapore's first regional centre, was developed in the 1990s. Other regional centres shaping up include Woodlands Regional Centre and Seletar Regional Centre.
JLL's Ms Tay described JLD as having "the makings of a vibrant live-work-play district". She noted that the private home prices achieved in residential launches there, and the buzz created by the commercial developments point to Jurong having shed its image as a polluted industrial area.
In Jurong West, the government is developing the Jurong Innovation District (JID), a 600-ha area including Nanyang Technological University (NTU), CleanTech Park and the surrounding areas of Bulim, Bahar and Tengah.
In the north-east, the Punggol North "enterprise district" is coming up; land-use and gross plot ratio guidelines will be prescribed at the district level there, thus allowing more flexible use of land.
JTC, the master planner and master developer for Punggol North and JID, is expected to release details of its masterplan for these projects this year and next year respectively.
Yvonne Lim, group director for physical planning at URA, said each growth region has its own value proposition.
Jurong Lake District (JLD), where the terminus for the high-speed rail (HSR) connecting Singapore and Malaysia will be sited, will gain access to a metropolitan region of some 10 million people in Iskandar and Kuala Lumpur. The Woodlands Regional Centre will benefit from the enhanced connection with Johor Baru through the Rapid Transit System.
Ms Lim added that the existing CBD will have scope to grow. "It is already a vibrant financial hub and will continue to be a key financial centre for Singapore."
JLL's Ms Tay noted that JLD's future connectivity via the HSR and four MRT lines, including the future Jurong Region Line and the Cross Island Line, will give it "an unparalleled advantage over other regional centres in attracting businesses to set up operations in the district".
However, she pointed out that most businesses will still need to be persuaded to be located outside the CBD, either partially or fully. In Hong Kong, for example, there is a rental gap of at least 60 per cent between the CBD and outside-CBD Grade-A office rents.
The rental gap in Singapore between a Grade-A office in the CBD and outside it stood at 34 per cent as at the end of last year, she estimated.
Cushman & Wakefield's Ms Li proposed that, in order to ensure an optimal mix of land use in the JLD, the URA consider tendering the sites using a two-envelope system, or imposing a minimum amount of space to be allocated for non-traditional uses. This is because traditional residential, office and retail spaces tend to command higher rents and capital values, and are hence preferred options for developers, she said.
Source: Business Times, 26 Aug 2017