SINGAPORE – In May 2021, developer Frasers Property said it had secured provisional approval from the authorities to redevelop Bedok Point into a residential development.
The mall was the first of several retail and office buildings that subsequently shuttered for redevelopment, as developers reassessed their use of space amid the prolonged disruption from the Covid-19 pandemic.
Experts expect more commercial properties to be converted to residential or mixed-use developments, given the high demand for residential properties and how the residential property market has thrived during the pandemic.
Since the pandemic hit, at least five developers have announced that they will be redeveloping their properties to include residences.
When Frasers Property launched Sky Eden@Bedok for sale in September 2022, about 75 per cent of its 158 units were sold on the first day. To date, 127 units, or 80 per cent, have been sold.
Mr Leonard Tay, head of research at Knight Frank Singapore, said: “If there is greater demand for residences as opposed to office buildings or retail malls in the current climate, developers will naturally shift to provide what the market requires, what is highest-and-best use.”
Citing data from the Urban Redevelopment Authority (URA), Mr Tay said a comparison of price movements of different building uses in Singapore has been signalling that there is more demand for private homes.
URA data showed the private residential price index grew by 10.6 per cent in 2021 and 8.6 per cent in 2022, while the office price index fell 5.8 per cent in 2021, but was relatively stable at minus 0.1 per cent in 2022. The retail price index declined by 4.2 per cent in 2021 and 7.8 per cent in 2022.
The rise in demand for private homes in the past two years has been driven by housing and investment aspirations by Singaporeans, and steadily increasing household incomes in the past decade, said Mr Tay.
“Now that borders are open post-pandemic, there might be more demand from foreign buyers attracted to Singapore’s stability and the modern affluent lifestyle that the city state offers,” he added.
Come August, CapitaLand Development will shut down JCube – a leisure and edutainment mall in Jurong East – and redevelop it into a 40-storey residential and commercial development. CapitaLand said the project will complement the Government’s plans to bring new homes, along with new businesses, recreational facilities and amenities, to the Jurong Lake District.
In May 2022, a joint venture involving Chip Eng Seng, Chuan Investments and SingHaiyi Investments was granted approval by the URA to redevelop Maxwell House, a 13-storey commercial development, into a mixed development with 324 apartments and about 46,800 sq ft of retail space.
In the luxury segment, the former AXA Tower is being redeveloped into a 63-storey office, retail, residential and hotel project that will house Singapore’s highest super penthouse.
City Developments Limited (CDL) will build Newport Residences, another luxury condominium, on the site of the former Fuji Xerox Towers in Tanjong Pagar.
A CDL spokesman told The Straits Times that despite the recent increase in marginal buyers’ stamp duty for higher-value residential properties, the developer believes that “discerning buyers and investors will continue to be attracted to well-located and thoughtfully designed properties in Singapore, given the city’s status as a safe haven and hub for business growth and new opportunities”.
Newport Residences, which will be launched in the first half of 2023, is part of Newport Plaza – a 45-storey mixed-use development that will include 246 freehold apartments from the 23rd to 45th storeys, Grade A offices and a retail component.
“With this redevelopment, we are converting an office building which is over 30 years old and in a prime CBD (Central Business District) location, into a modern mixed-use development,” said the CDL spokesman.
“As businesses and office workers continue to adjust to the ‘new normal’, infrastructural changes must similarly follow suit,” the spokesman added, noting that the URA plans to transform the CBD into a vibrant place to live and play in round the clock.
In 2019, URA introduced the CBD Incentive Scheme to encourage the conversion of existing, older, office developments into mixed-use developments, to help rejuvenate the CBD.
Under the scheme, eligible buildings can receive an increase in plot ratio which maximises the development’s gross floor area, said Ms Christine Sun, OrangeTee & Tie senior vice-president of research and analytics.
“As residential uses may have a lower capital value when compared with commercial uses, building owners who convert the land use from commercial to residential mixed-use development may now enjoy better returns or profitability with the increased GPR (gross plot ratio),” said Ms Sun.
She said that the residential market is a thriving segment in the real estate industry, with continuous price growth and strong housing demand over the past few years.
“Commercial properties, in contrast, were more affected by the pandemic, especially during periods of lockdowns… Therefore, developers may view residential property sales to be more lucrative in the long run,” she said.
However, not all building owners are able to change the existing use of their properties.
ERA Realty head of research and consultancy Nicholas Mak said some old and languishing retail malls that are strata-titled would need to be sold collectively to be redeveloped. The developer who acquires such a building would also have to seek approval from the relevant authorities to redevelop it.
Strata-titled units are sold individually to different owners who share the ownership of the building.
Mr Mak said one such strata-titled mall is Katong Shopping Centre in Mounbatten Road. It opened in 1973 and sits on a freehold plot of about 90,000 sq ft.
It was Singapore’s first air-conditioned mall with 425 units, and once known for its textile, clothing and shoe shops.
Today, it is a shadow of its former self and is filled with maid agencies.
“The retail industry has changed so much over the years, and some of these malls are starting to lose their relevance,” Mr Mak said, adding that redeveloping the shopping centre into a mixed-use development with one or two floors of retail space would be enough to cater to the needs of residents in nearby condominiums.
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