ST : Jurong Lake District makeover kicks off

Apr 9, 2010

Jurong Lake District makeover kicks off

Developer makes $350m bid for 1.9ha site; tender to open in two weeks

By Joyce Teo

A MIXED development site next to Jurong East MRT station is set to be put up for sale and kick-start the transformation of the area into Jurong Lake District.

The tender, which is expected in two weeks, has been triggered by an unnamed developer which has committed to a minimum bid of $350 million, the Urban Redevelopment Authority said yesterday.

It marks the first big step in the morphing of the sleepy Jurong area into the Jurong Lake District regional commerce centre, which could have started earlier if not for the global financial crisis.

The site was made available on the reserve list in late November 2008, some eight months after the Government unveiled its ambitious plans for the area. But consultants expected little interest then given the uncertain business environment and the difficulty in securing funding.

Sites on the reserve list are put up for tender only after a developer commits to a minimum bid the Government finds acceptable.

Colliers International's director for research and advisory, Ms Tay Huey Ying, said the trigger of the site for sale was 'the first sign of private sector endorsement for the Government's vision for Jurong Lake District'.

Plans for the area, which occupies 360ha - about the size of Marina Bay - will be implemented over 10 to 15 years.

The district will consist of two precincts. Jurong Gateway precinct will be the biggest commercial hub outside the city centre. It will provide a mix of office, retail, hotel, entertainment, and food and beverage outlets around the Jurong East MRT station.

The second, Lakeside precinct, is to be turned into a world-class leisure destination for locals and tourists. New edutainment or nature-based attractions, waterfront boardwalks, wetlands, parks and promenades will be developed in the scenic lakeside setting around the Chinese Garden and Lakeside MRT stations.

A number of government agencies, such as the Ministry of National Development and the Ministry of the Environment and Water Resources, as well as statutory boards such as national water agency PUB, will relocate their offices to Jurong Lake District in the near future.

The 99-year leasehold site that has been triggered for sale is in the heart of Jurong Gateway and has a land area of 1.9ha.

At least 30 per cent of the gross floor area of 1.15 million sq ft must be set aside for office use.

The rest can be used for additional office space or other uses permitted under white site zoning such as commercial (retail and entertainment), hotel and residential uses.

Property experts expect the plot to attract a handful of bidders, given its size.

Cushman & Wakefield managing director Donald Han said: 'It is a big-ticket item. So you would expect a few big developers to join forces and bring in their different capabilities into the equation, and at the same time they can spread their risk.'

Such developers would include the likes of Cheung Kong Holdings, Hongkong Land, Far East Organization and Hong Leong Group, he said. Cheung Kong Holdings said it did not trigger the tender, but will be keen to look at it.

With government agencies moving to the area, the successful developer can potentially build-to-suit for the Government, Mr Han said.

He projects that the site could attract bids of $380 to $400 per sq ft per plot ratio, above the minimum bid of $304 per sq ft per plot ratio.

The final bid price, experts suggest, is unlikely to be double the trigger bid given that it is a suburban site.

'The price can't shoot up too much, as there will be many more sites in the area. There will be a first-mover advantage,' said Mr Han.

Colliers' Ms Tay said: 'Developers could be taking the opportunity to pick up development sites at prices that are at a significant discount to peak prices, given that the office market is just about to turn around.'

joyceteo@sph.com.sg