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The future CBD: Finding the right formula for live, work and play


The two most significant and direct impact on CBD homes in Singapore is the work-from-home (WFH) phenomenon taking place globally

SINGAPORE (EDGEPROP) - With Singapore’s emergence from Phase Two (Heightened Alert), the real estate sector has started to chug along. Last month, new home sales fell by 29.7% on an m-o-m basis, but was still 83% higher than a year ago during the “circuit breaker”. It shows that the residential market has remained resilient, despite the extent to which Covid-19 has affected both incomes and sentiment, says Chua Su Tye, head of regional REITs research, Maybank Kim Eng. (See also: Post-pandemic, Singapore offices likely to face pressure to de-densify: JLL)

He points to home prices, which have risen 25.6% over 15 quarters from 2Q2017. “The strong price appreciation has, however, fuelled expectations of further government cooling measures in the near term,” he says. Chua attributes the rise to the return of a larger number of overseas Singaporeans, who are more likely to purchase a home, as the pandemic may have disrupted future plans to work abroad. Rents for HDB flats and condominiums have strengthened since June 2020, rising by 3.5% y-o-y and 2.4% y-o-y in March 2021 respectively, “despite the exodus of expats and foreign workers”, he adds. (See: Find HDB flats for rent or sale with our Singapore HDB directory)

Work-from-home culture

Covid-19 has brought about many changes, according to Karamjit Singh, CEO of Showsuite Consultancy. The most significant and direct impact on CBD homes in Singapore is the work-from-home (WFH) phenomenon taking place globally. “It could be a lasting work culture for some companies and employees,” he says.

The second most significant impact is “a renewed spotlight on countries which shone radiantly for handling the pandemic with strong governance, discipline and professionalism”, continues Singh. “Singapore is easily up there among the best. Foreign wealth managers and family offices find the entire package Singapore offers compelling for them to locate here. As a result, asset inflation is bound to set in.”


Located in front of UIC Building and V on Shenton, the site is adjacent to the upcoming Shenton Way MRT Station on the Thomson-East Coast Line (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Young local professionals and foreign families are attracted by the convenience of homes close to, or within, the CBD, as well as the iconic designs of specific CBD projects, says Singh. “Well-heeled local investors also find such projects worthy investments for their rentability.”

With unsold housing stock dwindling, the new residential development on the Marina View white site should sell well as a result of all these factors, provided it is “designed iconically according to global standards”, says Singh. He notes: “The new development would add to the changing mix of the CBD, with greater focus on a live-in population.”

The white site at Marina View that Singh referred to is the one that will be launched for sale on June 28. URA announced on June 10 that a developer had triggered the launch of the site, which until then, had been sitting on the Reserve List. The developer had committed to a minimum bid of $1.508 billion, which works out to $1,379 psf per plot ratio (psf ppr). Speculation has been intense as to the identity of the undisclosed developer. Some reckon it is a Chinese developer; others are betting it is one of the big local property players. No doubt, the eventual winner is likely to be a consortium. “We believe that it could be a partnership between local and foreign developers,” says Weileng Tang, managing director of Colliers International in Singapore.

The 84,148 sq ft, 99-year leasehold white site at Marina View has a plot ratio of 13.0. It could be developed into a new mixed-use development with about 905 residential units, a 540-key hotel, and 2,000 sq m (about 21,500 sq ft) of commercial space. Located in front of UIC Building and V on Shenton, the site is adjacent to the upcoming Shenton Way MRT Station on the Thomson-East Coast Line as well as within walking distance of the Marina Bay MRT Interchange Station for three lines, namely, the existing North-South and Circle Lines, and the future Thomson-East Coast Line.


The 84,148 sq ft, 99-year leasehold white site at Marina View has a plot ratio of 13.0. It could be developed into a new mixed-use development with about 905 residential units, a 540-key hotel, and 2,000 sq m (about 21,500 sq ft) of commercial space (Photo: URA)

The white site provides an opportunity for developers to create spaces that cater for the new normal in the post-Covid-19 era that will integrate residential, hotel and commercial components with green spaces and a green boulevard, says Alice Tan, senior director and head of consultancy at Knight Frank Singapore. “Indeed, the Covid pandemic has brought a new dimension to the way we work, live and play,” she observes. “Apart from the decentralisation phenomenon that may happen, people still like the vibrancy, connectivity and convenience of the CBD.”

Colliers’ Tang says: “Singapore remains a safe haven for investors, especially with investment volumes predicted to return to the pre-Covid levels by the end of the year.” Besides local developers, she sees foreign investors interested in “good-quality office buildings in the CBD that could be future-proofed”.

Office downsizing, de-densifying

However, firms are looking to curb costs, with some downsizing through renewals or relocations as well as assessing office space needs as they ease out from the pandemic, says Maybank Kim Eng’s Chua. Financial institutions and professional services firms, most of which are willing to implement WFH arrangements, are trimming their footprints as a larger proportion of their staff work remotely, he notes.

CBD office occupiers in Singapore could aim to reduce their footprint by 10%-20% over three years, with demand set to fall by 0.5 million to one million sq ft per annum from 2020 to 2022, to offset the effects of de-densified office layouts, predicts Chua.


Tang: The changes in activity patterns resulting from the Covid-19 crisis, such as more flexible work arrangements and telecommuting, further accelerate the desirability to have more mixed-use developments and a larger resident population in the CBD (Photo: Colliers International)

Global business hubs such as Hong Kong, London and Singapore are likely to have densities of 10 sq m per person or less, according to JLL in its June 14 report, Benchmarking Cities and Real Estate. Two-fifths of Singapore’s employees surveyed by JLL are expecting a less dense work environment in the future, says Tay Huey Ying, head of research & consultancy, JLL Singapore.

With the downsizing and relocation taking place among occupiers, shadow space of an estimated 600,000 sq ft has emerged in the CBD as at 1Q2021, even before the recent Phase Two (Heightened Alert), says Tang of Colliers. She reckons about 35%-40% of that shadow space has been backfilled. Technology companies, for one, are still keen on taking up office space in the CBD. For instance, Amazon was reported to have taken up more than three floors at Asia Square Tower 1. The space of about 90,000 sq ft was previously occupied by Citigroup. Flexible workspace operators are also expanding at a modest pace, adds Tang.

Despite the ongoing convulsions in the office sector, Colliers is expecting both CBD Grade-A office rents and capital values to grow about 2% by end-2021, on the back of strong economic growth, even though vacancy could rise to 5.5%.

“The changes in activity patterns resulting from the Covid-19 crisis, such as more flexible work arrangements and telecommuting, further accelerate the desirability to have more mixed-use developments and a larger resident population in the CBD,” says Colliers’ Tang. “With a more diversified sector exposure, this should enhance returns and [reduce] risks [for investors and developers].”


Despite the ongoing convulsions in the office sector, Colliers is expecting both CBD Grade-A office rents and capital values to grow about 2% by end-2021, on the back of strong economic growth, even though vacancy could rise to 5.5% (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Betting on CBD transformation

This is where the CBD Incentive Scheme, introduced as part of the 2019 Master Plan, comes into play. “It is aimed at transforming the CBD from a primarily office-centric district into vibrant, mixed-use neighbourhoods,” notes Tang.

Maybank Kim Eng’s Chua agrees. “Capital values are likely to find support from buoyant investment activity, especially for gateway cities like Singapore, which international firms have chosen as their regional headquarters,” he says. “Returns upside from the CBD Incentive Scheme could also spur investor interest in centrally located offices.”

Taking a bet on the CBD transformation and the future Greater Southern Waterfront is a joint venture between two Singapore-listed conglomerates, Chip Eng Seng Corp and SingHaiyi Group. Both entities are controlled by Chinese billionaire-turned-Singapore permanent resident Gordon Tang and his wife Celine. In fact, Celine Tang is the non-executive chairman of Chip Eng Seng and group managing director of SingHaiyi.

A joint venture made up of Chip Eng Seng’s property arm, CEL Developments and SingHaiyi Investments, a wholly owned entity of SingHaiyi Group, together with Chuan Investments, purchased Maxwell House, a 13-storey building with 145 strata units, en bloc for $276.8 million in early May. CEL Developments will take a 40% stake in the joint venture, while SingHaiyi and Chuan Investments will hold 30% each. (See potential condos with en bloc calculator)

Chuan Investments is a newly formed company owned by Longlands Holding, which is in turn a wholly-owned subsidiary of Chuan Holdings, a property and construction group in Singapore founded by Tng Kay Lim. The other stakeholder in Chuan Investments with a 33.33% stake is Yang Tse Pin, an entrepreneur with more than 30 years in property development and construction.


A joint venture made up of Chip Eng Seng’s property arm, CEL Developments and SingHaiyi Investments, a wholly owned entity of SingHaiyi Group, together with Chuan Investments, purchased Maxwell House, a 13-storey building with 145 strata units, en bloc for $276.8 million (Photo: Cushman & Wakefield)

Maxwell House makeover

Maxwell House sits on a land area of 3,883 sq m (41,800 sq ft) with gross floor area (GFA) of 234,074 sq ft. URA has given an outline advice to enhance the plot ratio from 4.3 to 5.6 last September. The new mixed-use development will have 20% of the total GFA zoned for commercial use and 80% for residential use. The existing site has a 99-year lease from June 1969, and the joint venture is seeking approval from the Singapore Land Authority to get a fresh 99-year lease.

In terms of location, Maxwell House is within walking distance of two MRT stations: the existing Tanjong Pagar MRT Station on the East-West Line, and the upcoming Maxwell MRT Station on the Thomson-East Coast Line. The property is also in the vicinity of the dining-entertainment area of Tras Street, Duxton Hill and Keong Saik Road, as well as shopping amenities at 100AM and the retail mall at Guoco Tower.

Maxwell House will benefit from the rejuvenation taking place in Tanjong Pagar as well as the spillover from the upcoming planned development of the Greater Southern Waterfront, says CEL Development in a Singapore Exchange announcement on May 7. “The strategic and convenient location of the property makes it a choice site for a work-live-play development,” says CEL.

This is the second time that Maxwell House has been put up for collective sale, at a lower price of $268 million. “Maxwell House is poised to be one of the best ‘work-live-play’ developments in the central region,” says Christina Sim, director of capital markets at Cushman & Wakefield, who brokered the sale. The property is one of the “rare residential development opportunities” to be out on the market, she adds.


Marina One saw 28 units sold from January to June to date, at a median price of $2,427 psf. (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Downtown luxury residences

In the Marina Bay area, the last site that was sold was at Central Boulevard in 2016. Malaysian group IOI Properties purchased the 99-year leasehold white site for $2.57 billion ($1,689 psf ppr) five years ago. The new development, Central Boulevard Towers, will have over 1.29 million sq ft of Grade-A office space.

“Most of the white sites in the Marina Bay area that were sold under the Government Land Sale (GLS) were previously for office developments or mixed-use developments with a significant office component,” points out Nicholas Mak, head of research at ERA Realty.

“The Marina View white site this time is different, as the residential component is significant,” adds Mak. “The land price for the site will be influenced by prices of residential units in that area.”

Based on the median price of property prices in the area and their projected trajectory, ERA’s Mak estimates that the future residential units at the new development at Marina View are likely to be launched for sale at prices between $2,500 and $2,800 psf, “provided the government does not introduce any new cooling measures before the launch of this new project”, he adds.


Showflat of a two-bedroom unit at Midtown Modern, where units have been sold at a median price of $2,715 psf (Photo: Samuel Isaac Chua/EdgeProp Singapore)

While the new launches in the Downtown Core, such as Midtown Modern and One Bernam, had been in the limelight this year, the resale market has been active too. Marina One saw 28 units sold from January to June to date, at a median price of $2,427 psf. At Wallich Residence in Tanjong Pagar, about 13 units were sold in the first five months of 2021, at prices ranging from $2.3 million ($3,544 psf) for a 646 sq ft, one-bedroom unit, to $8.2 million ($4,096 psf) for a 2,002 sq ft, four-bedroom unit on the 60th floor, based on caveats lodged. At South Beach Residences, the latest recorded transaction in May was for a 4,446 sq ft penthouse that fetched $16 million ($3,599 psf).

The launch of the Marina View white site will carry on the momentum of development in the New Downtown, says Ong Teck Hui, JLL senior director of research and consultancy. “It will provide more homes and hotel rooms to inject vibrancy in the city,” he adds. “There should be keen demand for residential units, as the last residential sales launch in the area was that of Marina One Residences in 2014.”

Browse Singapore Best Value Condos For Sale & New Launches 2021 today


Hospitality — V-shaped recovery?

Leonard Tay, head of research at Knight Frank Singapore, reckons that the bids for the white site are likely to surpass the previous GLS sales on a psf ppr basis. This is especially so if the developer that eventually wins the tender is “intent on constructing a luxury-class residence with a six-star hotel” that would be positioned to benefit from a post-Covid-19 recovery, he adds.

Singapore’s current dismal tourist arrivals of 108,633 between January and May 2021 is due to the prevailing travel restrictions as a result of Covid-19 resurgence in many Asian territories. The government has therefore remained cautious by not introducing any new hotel sites for sale in either the Confirmed or Reserve List, says Knight Frank’s Tay. The sole hotel site at River Valley Road has been on the Reserve List since 2H2019.

“While the hospitality sector is undoubtedly the most affected sector, it is here to stay,” says Colliers’ Tang. “Once the vaccination rate reaches 70%, the borders will reopen, and activity will be back to normal.” Tang is counting on a “V-shaped” recovery. “The timing of it could actually be very good as we can expect hospitality to return to pre-Covid-19 performance levels by 2024,” she says.

Check out the latest listings near Marina View, Asia Square Tower 1, Maxwell House, Midtown Modern, One Bernam, Wallich Residence, South Beach Residences, Marina One Residences, Shenton Way MRT Station, Marina Bay MRT Interchange Station, Tanjong Pagar MRT Station, Maxwell MRT Station

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