There's life in the ol' CBD yet
The old CBD is fast shedding its drab image and becoming more lively, says CHUA CHOR HOON
SHENTON Way, which saw the building of many office blocks in the 1970s, stood on par with Raffles Place in terms of rents at the time. But it was overtaken by Raffles Place which grew in the last three decades to be the prime office area, with bigger and newer office buildings. Average rents in Raffles Place in the second quarter of 2010 were 34 per cent higher than those in Shenton Way.
Rents in Raffles Place were more than 100 per cent higher than those in the Anson/Tanjong Pagar area in the 1970s as the latter was further away from the centre of activity.
However, the rental gap closed to about 70 per cent in the 1990s as buildings like Fuji Xerox Tower, Southpoint, and Keppel Towers improved the stock offering. Nevertheless, the area remains a poor cousin to Raffles Place. And so is Shenton Way, with its assorted buildings that do not form a critical mass.
But things are looking up for both Shenton Way and the Anson/Tanjong Pagar area, even as interest and hype centre on Marina Bay which is taking shape. The two older parts of the Central Business District (CBD) are undergoing a rejuvenation and becoming more vibrant too.
Living in the city taking off
Living in the city did not take off for many years despite government efforts through its land sales programme. International Plaza was one of the few pioneer buildings in the 1970s that integrated residential with office use.
The Urban Redevelopment Authority's (URA) 1995 planning report for the Downtown Core listed the lack of a live-in population in the predominantly office area as a weakness. Plans were made to introduce residential developments into the central business district.
State land was sold for mixed developments that included residential use. Office space was allowed to be converted into other uses including residential, except for a brief period between May 2007 and October 2008 when office space was in short supply.
This has resulted in new residential developments springing up in the old CBD like the Icon (completed), One Shenton, 76 Shenton, The Clift, Lumiere (completed recently), and Altez.
Their prices range from $1,700 to $2,110 per sq ft, slightly below the $2,000 to $2,600 per sq ft which smallish developments in District 9 like the Espada, Vivace, and Vida currently command. Owning a home in the CBD has become an investor's favourite, as evidenced by the quick sale of units at The Icon, One Shenton, and 76 Shenton when they were launched.
Hotel cluster is forming
There are currently only two large hotel developments - M Hotel (413 rooms) and The Amara (380 rooms) - in the Anson/Tanjong Pagar area. There are, however, numerous boutique hotels such as Klapsons, Berjaya Singapore, and New Majestic Hotel.
The cluster of hotels is growing, with two hotels (660 rooms) currently being built on government sale sites at Tanjong Pagar, and a confirmed site next to Tanjong Pagar MRT, which was launched for tender on July 30, that could supply an estimated 315 hotel rooms.
In addition, there are three reserve hotel sites in the H2 2010 government land sale programme - two at Tanjong Pagar and one at Robinson Road - which could contribute close to 900 rooms. When completed, the cluster of hotels at Tanjong Pagar will be comparable in size to those at the Singapore River.
Rental gap with Raffles Place closer
The office rental gap between Raffles Place and Anson/ Tanjong Pagar has closed since the 1990s to 42 per cent recently as new office buildings of prime quality were completed. Some occupiers from the prime Raffles Place area have moved to the new buildings at Anson/Tanjong Pagar, which reflects the area's growing attraction.
For example, BlueScope Steel has relocated its office from Singapore Land Tower to Twenty Anson while QBE and Sumitomo Corporation have shifted from OCBC Centre and Equity Plaza respectively to Mapletree Anson.
Although the rental gap between the Raffles Place and Shenton Way areas has remained at about 35 per cent since 1990, this could become closer in the future as more old buildings are renovated or redeveloped. There is hardly any state land in Shenton Way that the government can sell to assist in rejuvenation. However, the private sector has in recent years been active in refreshing the area.
Many old buildings have or are undergoing rebuilding such as Tokio Marine Centre (former Asia Chambers Building), UIC Building, Afro Asia Building, and VTB Building. More changes are in the pipeline as several old buildings have recently changed hands, like Marina House, Chow House, Aviva Building, Cecil House, and DBS Building.
The old CBD is fast shedding its drab image and becoming more lively. The Anson/Tanjong Pagar end is developing into a mixed use area with spanking new offices and hotels while the Shenton Way area is becoming more residential with old offices being upgraded. The 24-hour McDonald's at Springleaf Tower speaks volumes for the growing population and nightlife in the old CBD.
The writer is head of South-east Asia research, DTZ
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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