A Tale of Two Centres
Jurong Gateway and Paya Lebar Central are two up-and-coming commercial hubs, report DESMOND SIM and CHUA YANG LIANG
SINGAPORE'S population reached 5.08 million as at end-June 2010 based on advance estimates. This is a 26 per cent increase from the last census conducted in 2000. The Ministry of Trade and Industry also forecast that the economy would grow between 13 and 15 per cent in 2010 while the long-term economic growth should moderate to a more sustainable level of 5-6 per cent as most economists have suggested. If this population trend supported by the strong economic growth prospect continues, we should expect greater urbanisation of suburban centres.
The rise of these regional centres not only spreads jobs across the island (so as to avoid overloading the downtown) but effectively expanded the commercial area which was traditionally in the downtown, to meet Singapore's long-term economic needs.
Four regional centres were first identified in 1990: Tampines, Jurong East, Woodlands, and Seletar. Seletar was subsequently dropped while Tampines regional centre became an exemplary success of this decentralisation plan. In 1992, Tampines New Town was given the World Habitat Award by the Building and Social Housing Foundation of the United Nations for outstanding contribution toward human settlement and development.
In addition, several sub-regional centres were also identified to serve as supporting hubs between the Central Business District and these regional centres. They include Buona Vista, Bishan, Serangoon, Paya Lebar, and Marine Parade. These commercial hubs are to be linked by orbital rail lines like the Circle Line. To date, Bishan is an exemplary sub-regional centre, buzzing with a large day and night population served by an MRT interchange, a modern retail mall, offices, and a regional riverine park.
In May 2008, the Urban Redevelopment Authority (URA) revealed the Master Plan 2008 and announced that there would be further plans to intensify these decentralised commercial hubs. Two of the plans include the Jurong Lake District and Paya Lebar Central. The former is to be transformed into a regional centre for business and leisure and the latter into a sub-regional centre with offices, retail, hotels, and attractive public spaces.
Jurong Lake District
Since the 1960s, Jurong has been synonymous with the industrialisation of Singapore. However this image is fast changing. Currently, in addition to the existing industrial areas, there is also a large resident population housed predominantly in public housing and smaller pockets of private housing estates.
The 2008 Master Plan unveiled grand plans to re- brand Jurong into a more vibrant neighbourhood. Renamed as Jurong Lake District, this 360-hectare precinct will consist of a commercial hub focused on the Jurong East MRT interchange - appropriately named as the Jurong Gateway plus a synergistic connection to the leisure destination around the existing Jurong Lake.
The 70-hectare Jurong Gateway will be set in a unique lakeside environment, providing some 500,000 sq m of office stock and another 250,000 sq m of retail and entertainment space. This quantum is in fact more than two-and-a-half times the size of today's Tampines regional centre. Complementing the Jurong Gateway is the International Business Park, as well as the research and educational institutions in the vicinity. Coupled with plans for 1,000 new private homes to be added around the MRT station, and up to 2,800 hotel rooms in the area, it is poised to be the biggest commercial hub outside the CBD.
The public, including property developers, has embraced the plans for this new district. A few months after the launch of the 2008 Master Plan, Frasers Centrepoint Homes launched Caspian - a 712-unit, 99-year leasehold condominium located close to Lakeside MRT station. This project, despite being launched in the midst of a global economic slowdown, was sold out within weeks of its launch.
Riding on this momentum, there was also strong interest from developers when another 99-year leasehold residential site adjacent to Lakeside MRT station was launched on the confirmed list in March this year. This 16,117.2 sq m site attracted a total of 14 bids with Keppel Land putting up the winning bid of $499 psf per plot ratio. This is double the land price that Frasers Centrepoint Homes paid for the Caspian site at $248 psf per plot ratio in December 2007.
In June 2010, the white site at Jurong Gateway Road was awarded to Lend Lease when it submitted the highest tender price for the site at $650 psf per plot ratio.
As a result of strong interest in Jurong over the past six months, the Ministry of National Development has revised upwards the development charge (DC) rates for the area. According to the URA's DC map, the Jurong Gateway falls within Sector 112 while Lakeside falls within Sector 113. Based on the commercial use group, Sector 112 witnessed the highest growth among the other 118 sectors at 25 per cent, while Sector 113 was tagged with a growth of 7 per cent. On the non-landed residential use group, both Sectors 112 and 113 saw increases of 13 per cent and 17 per cent respectively.
In the residential use group, both Tampines and Jurong Gateway started off at a similar implied land value. Possibly through greater interest in the Tampines region since the late 90s, its implied land value has edged higher. Post 2003, the residential implied land value for Jurong Gateway witnessed a surge and now commands a notable premium over Tampines. More residential developments especially in the West Coast/Clementi areas is the main factor.
Interest for development land in the Jurong Gateway and Lakeside areas are likely to intensify over the next few years. Land prices in these areas are likely to face upward pressure resulting in a narrower gap between Lakeside and Tampines, and Jurong Gateway to command an even higher premium over Tampines eventually.
Over on the commercial use group, Tampines has been enjoying a premium over the other two sectors since the mid-90s. Recent land transactions however have reduced the premium that Tampines has over Jurong Gateway. It is probable that the implied land value in Jurong Gateway would eventually surpass that in Tampines.
Paya Lebar Central
Based on the 2008 Master Plan, the vision for Paya Lebar Central is to develop it into a lively, pedestrian-friendly commercial hub with a distinctive Malay cultural identity. A new public plaza next to Paya Lebar MRT will be developed as a focal point. There are about 12 hectares of land available for development, translating to some 294,000 sq m of office, and another 200,000 of hotel and retail, spaces. In addition, there will be more community spaces and a new and wider pedestrian mall that would enhance the area's distinctive Malay heritage.
Listed under the government land sales reserve list, there is presently a commercial site available for tender that is located next to the Paya Lebar MRT interchange. This 1.42-hectare site can generate about 59,640 sq m of commercial gross floor area with further details to be released in December 2010.
Of all the new growth areas identified by the 2008 Master Plan, Paya Lebar Central seems to be the most inert in terms of activity so far. As compared to Sector 104 (Bishan sub-regional centre), the implied land values for Sector 101 (Paya Lebar Central) for both commercial and residential use groups still lag far behind.
Perhaps due to the proximity to good schools and established amenities in Bishan, Sector 104 (Bishan sub-regional centre) commands a much higher residential land premium over Paya Lebar Central. In commercial use group terms, the Bishan sub-regional centre again has had a sustained premium over Paya Lebar Central since 1996.
Looking ahead, as the development plans for Paya Lebar Central are focused mainly on commercial activities around the Paya Lebar MRT interchange, there will be greater pressure on the implied land value to rise to that of the Bishan sub-regional centre. However the same cannot be said for the residential implied land value.
Conclusion
Tampines regional and Bishan sub-regional centres are two living examples of the impact of the 1991 Concept Plan. These areas have not only established, but commanded a premium over other areas in terms of land values. If the planner's vision is upheld and Singapore continues to enjoy sustained economic growth, more property investments in the suburban growth centres can be expected. Land values in places such as Jurong Lake District and Paya Lebar Central can but only move northwards.
Desmond Sim is associate director, research and consultancy Singapore and Chua Yang Liang is head of research, South-east Asia, Jones Lang LaSalle
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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