DEVELOPERS here already have the option to build retirement housing villages on any site that is zoned for residential use.

But the Government will study a suggestion by Nominated MP Laurence Wee that those interested in developing such villages be given the option of 60-year land leases – or 30-year leases that can be extended for a further 30-year period.

Senior Minister of State for National Development Grace Fu informed Mr Wee that the Urban Redevelopment Authority had, in fact, already made a Jalan Jurong Kechil site available for sale on a short tenure of 30 years.

‘The developer has the flexibility to develop the site for retirement housing or conventional housing development. The shorter tenure of 30 years allowed for the site was intended to reduce the land costs, which could facilitate retirement housing development,’ she said.

Ms Fu made the point that not only was the option of residential zones already available, but the developers could also build developments targeted at niche markets like the elderly. She said the Housing Board also built studio apartments that are custom-built for elderly living.

Mr Wee had envisaged a development of low-rise condominiums which offers elderly folk a means to live with peers, while staying socially involved to combat loneliness and depression.

Property developer and former Real Estate Developers’ Association of Singapore chief Daniel Teo, 67, said the Government was ‘moving in the right direction’.

He too is keen on developing a retirement village and agreed that longer leases would be more attractive.

He explained that higher building costs and the benefits of economies of scale might mean that having a longer lease would serve a developer better.

Source: Straits Times, 5 Mar 2010

Some one million square feet of office space in the Central Business District (CBD) is likely to be converted into at least 1,000 private homes over the next three years.

Property analysts say that with the Marina Bay financial district now taking distinct shape, developers are looking to recycle older office buildings in the current CBD in anticipation of business activity moving to the new hotspot.

Redevelopment plans are also motivated by climbing luxury home prices which contrast sharply with falling office rents.

City Developments said at its results briefing last Thursday that it was looking to see if it could convert any of its office buildings in the ‘old’ CBD to residential use.

‘It is a question of demand,’ said CityDev chairman Kwek Leng Beng at the briefing.

CityDev’s parent company Hong Leong Holdings is already redeveloping 76 Shenton Way, which has a net lettable area (NLA) of about 92,700 square feet of office space.

The 202-unit residential project due to come up on the site is likely to be launched within the next few weeks.

Other similar conversions in the pipeline include UIC Building on Shenton Way and Starhub Centre on Cuppage Road.

‘With the theme of working, living and playing in 21st century Singapore fast becoming a lifestyle reality, we see great potential in quality residential developments in the core central region,’ said a Hong Leong spokesman.

The trend is not new. Developers were looking to convert selected office space into residential use as far back as 2007. City- Dev, for example, launched its One Shenton residential project in January 2007, converting an office block into residential space. Since then, 316 apartments in the 341-unit project have been sold, with many going for more than $2,000 per sq ft (psf).

But other such plans were put on hold when in May 2007, fearing a shortage of office space, the Urban Redevelopment Authority (URA) called a halt to all conversion of offices in the central area to curb further depletion of existing stock.

The ban was lifted in late 2008 as fears of an office space oversupply emerged.

Knight Frank chairman Tan Tiong Cheng said that with the Marina Bay Sands integrated resort (IR) now ready to open its doors and the entire Marina Bay area taking shape, developers are now taking another look at their buildings located in the current CBD.

‘It is the government’s intention to have a new CBD in Marina South. So there is concern that some of the older office buildings may not be relevant to future needs,’ said Mr Tan. ‘Office rents have also dipped, so it is a good time to look at redeveloping some of these buildings now that the ban has been lifted.’

Elsewhere on Shenton Way, UIC has received permission to redevelop UIC Building into a mostly residential project. UIC’s board says it is still assessing all alternatives to ensure the best use for the building. But sources told BT that the conversion could start some time this year. The property has close to 400,000 sq ft of office space.

Office real estate investment trust (Reit) CapitaCommercial Trust also said in January that it is looking at redeveloping Starhub Centre on Cuppage Road into a residential and commercial project with up to 80 per cent of the gross floor area devoted to residential use. The property currently has an NLA of about 280,000 sq ft and analysts estimate that 200-300 upmarket homes could be built on the site.

Other office properties that could be converted (either fully or partly) into private homes include KOP Capital’s The Spazio on Cecil Street, and three buildings owned by Fission Group and Yi Kai Group – VTB Building on Robinson Road, and Aviva Building and Cecil House on Cecil Street.

In all, around one million square feet of office space could be removed from the market and transformed into upmarket homes.

City living has, in recent years, become more popular and luxury home prices are expected to climb this year. UBS Investment Research, for example, expects luxury home prices to rise 40 per cent in 2010 to reach $4,000 psf and maintains that prime home prices (in districts 9, 10, 11) could reach 2007 levels this year.

Falling office rents and an upcoming glut of office supply also means that office rents are widely expected to continue falling. Property firm Savills expects a 20-25 per cent fall in Grade A office rents in Singapore this year.

But Knight Frank’s Mr Tan says that not all office buildings in the present CBD can be converted into homes.

‘City living is only attractive if you have a view of the sea or you have some kind of a city vista,’ he said.

The conversion of some office space into residential units will lend support to rents, analysts said.

UBS Investment Research said in late January that it now expects over one million sq ft of office space to be removed in 2010 and 2011, instead of the 550,000 sq ft expected earlier.

‘As a result, we upgrade our prime office rents in 2010-2013 by 5 per cent,’ said UBS analyst Regina Lim. ‘We now expect prime office rent of $8.70 psf per month by end-2010 and $9.70 psf per month by end-2011.’

Source: Business Times, 1 Mar 2010

THE government has decided to do away with a tax allowance scheme for businesses introduced in the 1940s to encourage Singapore’s industrialisation. The axed scheme will be replaced by one designed to enhance land productivity – but only companies from nine chosen sectors will benefit from the new scheme.

Singapore should promote the intensification of industrial land use and move towards more land-efficient and higher value- added activities, Finance Minister Tharman Shanmugaratnam said yesterday.

‘The Industrial Building Allowance (IBA) has met its objective but is no longer adequate or relevant to meet our current priorities,’ he said. ‘It does not distinguish between efficient and inefficient uses of industrial land.’

In its report earlier this year, the Economic Strategies Committee said Singapore has to support the intensification of industrial land use as there are now greater demands on the country’s limited land resources.

The IBA gave tax allowances to companies for capital expenditure on the construction or purchase of an industrial building or structure.

Its replacement, the Land Intensification Allowance (LIA), similarly allows companies to claim for capital expenditure incurred to construct a qualifying building or structure.

But only companies from nine sectors – pharmaceuticals, petrochemicals, petroleum, chemicals, semiconductor-wafer fabrication, aerospace, marine and offshore engineering, solar cell manufacturing and other ’speciality’ industries – will qualify for the LIA.

These sectors have been singled out as part of the government’s long-term plans to move Singapore’s manufacturing sector up the value-added chain.

The building or structure will also have to meet the gross plot ratio (GPR) benchmark relevant to the industry sector of the building user. To encourage intensification, the benchmarks for each industry sector will be set around the 75th percentile of actual GPRs for the sector.

Qualifying firms will be granted a first-time allowance of 25 per cent, then 5 per cent each year for qualifying expenditure on the construction of buildings.

Analysts are surprised by the switch, as fewer companies will now qualify.

‘The old IBA did not restrict the benefits to only a few sectors,’ said David Lee, executive director of tax services for KPMG. ‘At the end of the day, if those (nine industry) sectors are the ones they are encouraging, they can always give them incentives instead.’

He pointed out that the new scheme means that companies in some of Singapore’s biggest industries – such as electronics manufacturing and equipment manufacturing – will be missed out.

Ernst & Young tax director Helen Bok said: ‘Many companies will be disappointed that the IBA will be phased out because this is a significant deduction for those carrying on qualifying activities. This will increase their cost of doing business in Singapore.’

But pegging the tax allowances to building plot ratios will encourage building owners to maximise land use, which is a good move for land-scarce Singapore, said Colliers managing director Dennis Yeo.

Source: Business Times, 23 Feb 2010

Yes, go west and make Tuas the new mega port, if a proposal to free the Tanjong Pagar port area for a waterfront makeover gets the green light, experts suggest.

Although the lease at Tanjong Pagar, Keppel and Pulau Brani terminals ends only in 2027, it was a proposal by the Economic Strategies Committee (ESC) last week that sparked the buzz among shipping and property analysts.

The ESC had mooted turning Tanjong Pagar into a new waterfront development. It also called for a study on the long-term possibility of consolidating current port facilities at Tuas into a mega container port.

The Tanjong Pagar port area currently boasts an area of 85ha and a quay length of 2.3km.

The Maritime and Port Authority of Singapore (MPA) said that under the Government’s Concept Plan review, it will assess the feasibility of a consolidated mega port.

The MPA will take into account its need to achieve best-in-class efficiency and sustain Singapore’s long-term competitiveness.

Mr Ho Eng Joo, executive director of investment sales for real estate consultancy Colliers International, said giving the go-ahead would be good both for the Tanjong Pagar and Tuas areas.

He said: ‘With its good location and easy access to Raffles Place and Shenton Way, Tanjong Pagar will be a very exciting waterfront and developers will be interested in it.

‘Tuas, mostly industrial, will have the complementary infrastructure for a port.’

Mr Karamjit Singh, managing director of Credo Real Estate, said it makes sense to relocate the port as it is unproductive to have it so close to the heart of town as the land could be better used.

‘Tanjong Pagar will be of interest to developers and investors alike,’ he added.

Dr Thomas Menkhoff, practice associate professor of organisational behaviour and human resources at the Singapore Management University’s Lee Kong Chian School of Business, said many ports elsewhere have moved because they were no longer competitive at their original location or because of ’strategic common sense’.

Citing the German city of Bremerhaven, he said its new riverside quay on the mouth of the River Weser enhanced the competitiveness of the city’s port.

Associate Professor (Practice) Tan Kok Choon from the department of decision sciences at the National University of Singapore Business School, said Singapore’s main container traffic is now distributed over two locations: Tanjong Pagar and Pasir Panjang.

He agreed that if all container traffic could be concentrated at one place, efficiency and utilisation will go up.

Prof Tan said the new port must have such capabilities as turning around container vessels fast and getting vessels to berth quickly on arrival.

‘As Singapore’s container volume continues to grow beyond 2027 to become a super mega trans-shipment hub, the new location should be large enough to cater to more container vessels calling at Singapore,’ he said.

He added that given Singapore’s geography, the new port will most likely have to be along the southern coast, which leaves Tuas as the ideal choice since Changi Airport is in the east.

Dr Menkhoff said: ‘The Jurong Island project and the successful extension of the Tuas Peninsula over the last few years show that the western area has what it takes to have new port facilities.

‘However, concerns might include balancing development needs and protecting marine life as the waters around Tuas contain dozens of marine species.’

At least one shipping line is keen to see such a move.

Mr Teo Siong Seng, president of the Singapore Shipping Association and managing director of Pacific International Lines, said most of the container goods movement is towards factories in Tuas.

‘So a port in Tuas would save on road transport greatly. It’s a good plan and we definitely welcome it.’

Source: Sunday Times, 7 Feb 2010

PROPOSAL: Where do you go when you are running out of available land to build on?

Underground, according to the sub-committee of the Economic Strategies Committee that looked into raising land productivity.

It suggests that vast quantities of underground space can be carved out for new development once a national geology office is set up to conduct surveys, update geological maps, develop a subterranean land rights system and determine how underground areas can be priced.

Such an office could act as a repository for all information on underground Singapore, and provide expert advice to the public and private sectors.

It could reduce the uncertainty involved for developers looking to build underground. And, by providing better information, developments above and below ground could be synchronised.

The state could supplement its ‘land bank’ via the creation of such spaces alongside new underground infrastructure projects such as MRT stations. This will help create new spaces to locate emerging industries.

In true Singapore fashion, the vision is accompanied by an ‘underground masterplan’, somewhat like what the Government draws up regularly to determine the uses and density permitted for specific plots of land (above ground) over a 10- to 15-year period.

POSSIBILITIES: Granite and sedimentary rocks such as sandstone and limestone cover about two-thirds of Singapore, according to the Institution of Engineers Singapore (IES), and it is within these formations that developments can be constructed.

The upside is that technology for such work is established, although experts fear it will take some time before people are willing to accept the idea of living more than six feet underground.

But IES suggests that underground space could be used to house power stations, sports facilities, warehouses, wafer fabrication factories, laboratories, research centres and even incineration plants.

Moving such facilities underground would free up land for housing, parks and open spaces, thereby raising the quality of life.

Furthermore, the legal foundations for the development of subterranean land rights already exist, says Associate Professor Kelvin Low from the Singapore Management University’s School of Law. At present, the owner of a plot of land has the right to build both skywards and into the ground via the creation of basements. This existing framework can easily be adapted for underground developments.

In order to allow two projects on each plot of land, the Government could subdivide state-owned land so that the underground portion is treated separately from that above ground. In the same way, a private owner of land can apply for permission to subdivide his or her plot to allow for dual above- and below-ground construction.

PRECEDENTS: Singapore currently uses underground space to accommodate shopping malls, train networks, new highways, civil defence shelters, pedestrian links, and storage for ammunition and oil. Think CityLink underground mall, which links City Hall MRT station to Suntec City, and the 12km-long Kallang-Paya Lebar Expressway, of which 9km runs underground.

And subterrestrial success stories abound across the world.

The Canadian city of Montreal is well-known for its underground city called Reso. Inhabitants can live, work, eat, exercise and be entertained there without setting foot above ground, where temperatures can slip below 10 deg C for six months of the year.

More than 30km of underground tunnels and ground-level interior walkways link the offices, hotels, malls, movie theatres and museums which are part of this network.

The Japanese city of Osaka also has an integrated underground city centre and no fewer than six underground malls, all of which are connected by rail. The walkways, and office and department store basements form a labyrinth-like subterranean network, adorned with artificial rivers, sunken gardens and glass facades to direct natural light to the basement level.

PRACTICAL PROBLEMS: Despite technological advances, building underground is inherently difficult. Extensive geotechnical studies and mapping are required, plus feasibility studies to ensure projects are viable.

Cost is another big factor, as depending on soil conditions, such developments can end up costing up to three times more than comparable surface structures.

Property consultant Knight Frank’s managing director Danny Yeo feels cost considerations will restrict large underground developments to areas where land costs are high, like Orchard Road.

How to protect existing surface-level property could also prove to be another stumbling block.

According to SMU’s Prof Low, owners of properties next to underground sites are protected by law, given that subterranean developers are deemed liable for any damage to their buildings resulting from construction, even if it is not due to carelessness.

Such liability, he notes, is stricter than that found in some other common law countries like Canada and New Zealand, which require proof that the developer was negligent before he can be made liable.

While Singapore’s stricter regime safeguards the interests of those with terrestrial property, it could render subterranean development more expensive here if neighbouring buildings were shoddily built and hence more easily damaged, he notes.

Source: Straits Times, 6 Feb 2010

EVEN in property-obsessed Singapore, industrial sites are often dismissed as drab, dull areas that hold no interest for the general public.

But new-era industrial parks like the one planned at Lorong Halus in Tampines could change all this.

Formerly a landfill, the land is now home to a wide diversity of wildlife.

When it is turned into an industrial park in the years to come, factories and plants will be sited among lush greenery and waterfront lifestyle amenities that the public can use.

The planned Lorong Halus industrial area was one of the examples cited by the Economic Strategies Committee sub-committee on how to make better use of land. Among its recommendations was a suggestion to better integrate residential, business, leisure and even ‘clean’ industrial uses into ‘live-work-play’ enclaves.

Source: Straits Times, 5 Feb 2010

A STUDY will look at ways to carve out more underground space – for possible use as public areas such as museums and galleries.

It could also be used for facilities such as power stations and for storage, said Senior Minister of State for National Development and Education Grace Fu.

Singapore now has underground malls and pedestrian walkways, though underground uses can be ‘quite varied’, she said.

‘We can foresee a museum, an art gallery, a science museum, something for the public to use as well as public infrastructure like an electrical substation,’ said Ms Fu, co-chair of the ESC sub-committee on land productivity.

Talks are under way on using MRT stations for such functions. ‘URA has always been thinking about what we can do at the Botanic Gardens station… We know there’s a potential there; we haven’t found a specific use so we will look out for the opportunity,’ she said.

Architect Tai Lee Siang said if underground space was promoted properly, ‘people’s acceptance… will change rapidly, especially because Singapore has a finite land resource’. He added underground areas can suit uses needing little or no daylight, such as theatres.

Ms Fu said a national geology office could be set up almost immediately, with an underground masterplan to follow.

Source: Straits Times, 5 Feb 2010

SINGAPORE should look more closely at how it can use its industrial land to help enhance its liveability as a city, the high-level Economic Strategies Committee has recommended.

One proposal is to site offices, shops and restaurants alongside manufacturing plants. And if this is done well, these new facilities can breathe new life into previously sterile areas.

In an interview on Wednesday, Senior Minister of State for National Development Grace Fu – who co-chaired the ESC sub-committee on maximising value from land – said the Government should inject this type of flexibility into the use of land in a gradual and targeted manner.

But she also warned against too much flexibility, as it could raise the price of industrial land to an unaffordable level for businesses.

Still, one example of an industry that could benefit from flexibility in land zoning is food manufacturing, suggested Ms Fu.

There is no reason why a food manufacturer with its manufacturing business in an industrial park should not be able to locate its plant next to an office where research and development is done or a kitchen or restaurant where products can be tested by consumers, she said.

Over time, this type of area could even become a hub for the food and beverage industry to test consumer responses and tastes, she added.

Suki Sushi director Kelvin Ong said: ‘We’re not allowed to do commercial sales in a factory.

‘Yet doing it this way means the profit margin is good, and the consumers benefit because you cut out the middleman’s fees and you don’t need to pay the shopping mall landlord.’

He also said mall rents are high for start-ups, and added: ‘Besides, on weekends, some people may want to go to a factory area to shop for cheap goods. There will be more choices.’

Ms Fu also said the Government should be prepared to explore different lease tenures. Now, industrial land typically comes with a 30-year lease, with an option to extend.

‘In our discussions with industrialists, we have realised product life cycles are a lot shorter. We thought we could explore other lease terms.’

Other ideas the sub-committee threw up included a suggestion that land allocation be subject to a measurement of productivity like the number of jobs created per hectare.

Industrialists are also being encouraged to build higher instead of wider. Ms Fu said grants can be made to industrialists for them to study all this.

And turning to the subject of industrial landlord JTC, she said: ‘From developing land, JTC may have to look at developing townships for new industrial parks.’

Mr Tan Tiong Cheng, chairman of Knight Frank property consultancy, said injecting flexibility is clearly good.

‘If people see Singapore as very adaptable and conscious of change, it becomes more attractive,’ he said.

Source: Straits Times, 5 Feb 2010

The government could be making a wide range of changes to the property market – from offering a greater variety of lease tenures to relaxing rules for industrial land use.

These are some of several proposals from the Economic Strategies Committee (ESC) sub-group studying ways to maximise the value of Singapore’s land. It also suggested that the government track land productivity more closely, review the reserve list system of land sales, and enhance links with land-abundant neighbouring countries.

These ideas came in a report from the sub-group yesterday. The paper also contains proposals announced earlier on Monday, calling for the makeover of Tanjong Pagar into a waterfront district, the creation of underground space and more intensive use of industrial land.

Improving choice and flexibility in the property market was one of the key themes in the report. ‘In addition to robust planning, we should also focus on making our land use system more nimble and remove barriers that may impede the flow of land resources from less to more land-efficient economic activities,’ the sub-group said.

The sub-group recognised that a wider range of lease tenures would meet varying corporate needs. While industrial sites tend to carry 30 or 30+30-year leases, some capital-intensive industries have asked for longer leases for greater certainty on their investments. For commercial sites, the state usually sells them with 15 or 99-year leases but some have asked for something in between, say 60-year leases.

Property consultants generally welcomed the proposal. For instance, banks may feel more secure lending to businesses operating on sites with longer leases, said Knight Frank chairman Tan Tiong Cheng. But there are also concerns – having different lease tenures in an area may impede urban renewal later, he added.

Another suggestion from the ESC sub-group pertains to zoning and land use. Some firms have asked for an expansion of allowable uses for state property, or more relaxed guidelines on housing other activities within an industrial zone.

These requests are particularly relevant as product cycles get shorter, and the line between production and services becomes blurred. And in developing entire industries, manufacturing, research and consumer-testing activities may have to come together.

Other zoning assumptions such as buffers between residential and industrial areas may be in for a review, said Senior Minister of State for National Development and Education Grace Fu in an interview. She is also co-chair of the sub-group.

But increased zoning flexibility will come ‘in a very targeted way’, she emphasised. ‘Zoning allows us to segment land use and therefore keep industrial land affordable. . . We are not talking about very broad-based changes in the zoning framework.’

There were also positive responses to having more wiggle room in land use and zoning. Colliers International research and advisory director Tay Huey Ying supported this, though she noted that ‘it may make land valuation a bit more tricky’.

The government should also consider offering more types of business locations, the sub-group said. For instance, Gillman Village could become home to a creative cluster, while Lorong Halus could be a waterfront industrial park with more amenities and lush greenery.

The ESC sub-group further recommended that the government place greater emphasis on land productivity when deciding how to allocate land among various uses. For instance, it should track and consider indicators such as value-added and jobs generated per hectare.

As the other co-chair of the sub-group, Boustead Singapore chairman and group CEO Wong Fong Fui described: ‘It is like you have a land budget for economic development and thinking about how to invest it to maximise the economic ‘yield’ from the land.’

The wide range of proposals is expected to have some impact on the upcoming Concept Plan 2011, but Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that ‘it is still early days’ to say how reviews would go. Changes should be gradual, he reckoned.

Source: Business Times, 5 Feb 2010

TECHNICAL complications on creating underground space aside, how would the government value subterranean land?

The Economic Strategies Committee had an eye on this issue when it proposed that the government draw up a subterranean land rights and valuation framework. Some industry watchers believe that underground space can be valued based on its income potential, but overcoming high building costs and reaping sufficient yield would pose challenges.

According to the National University of Singapore’s School of Design and Environment Associate Professor Willie Tan, the valuation of underground space would be the same as that for other properties. For instance, the value could be based on the space’s income potential less cost. ‘If this cannot be covered, then (the space) does not get built,’ he said. ‘If one looks at an underground shop, key features such as location, access, size, design, safety and quality still hold.’

Cushman & Wakefield Singapore managing director Donald Han said that underground space can be valued based on the rents it can fetch. Rents at some retail outlets underground can be some 15-20 per cent lower than those above ground, he added. Market observers raised high construction costs as a key concern. Mr Han reckons that the move to venture underground could take time because of this, unless technological advancements reduce costs in the future.

Dr Tan pointed out that because of the high costs, underground space ‘requires high-yielding land uses to pay their way’. Alternatively, the space should support high density movement of people or goods. As a result, it might be more suitable for commercial rather than residential uses. Underground space can be used mainly for storage facilities, malls, hotels, subway stations, car parks and infrastructure. It would not be suitable for industries which generate a lot of noise, he said.

Jones Lang LaSalle South-east Asia research head Chua Yang Liang believes that initial ventures are likely to be state-driven because of the high costs. The government could perhaps subsidise part of the land price to encourage private sector involvement later, he said.

Source: Business Times, 3 Feb 2010