Ong Choon Fah: CBD evolving into clusters of mixed-use districts
The real estate sector is undergoing a seismic shift. It’s no longer about working from home or the office but from virtually anywhere — it could even be the café or the park, says Ong Choon Fah, CEO of Edmund Tie. Offices will still retain their relevance but will be reimagined: “We are social creatures, and we still like to meet and interact with people,” she adds. “It’s where ideas are birthed and challenged, and we can co-create and co-enjoy.”
Ong sees the CBD evolving into multiple clusters of mixed- use districts.
The rejuvenation of the CBD has already been set in motion. Last year, URA rolled out the CBD rejuvenation incentive scheme under the 2019 Master Plan. “Changing global trends are reshaping the spaces in which people live, work and play,” according to URA in its release. “To attract talent, business districts all over the world are racing to become attractive places that cater to the varied needs of modern lifestyles. Singapore’s Downtown, comprising the Central Business District and Marina Bay, is no exception.”
New incentives offered by URA include bonus gross floor area (GFA) to encourage the conversion of existing older office developments into mixed- use developments. This will help rejuvenate the CBD, by including more residences, hotels and creative lifestyle possibilities.
Are the incentives enough? “URA has been trying to do this for a long time to bring residents back to the CBD,” says Ong. “When you have residents here, they will be able to support the amenities, whether it’s F& B, retail or lifestyle.”
So far this year, the 50- storey AXA Tower on Shenton Way has been slated for redevelopment, with Alibaba taking a 50% stake. Another landmark earmarked for redevelopment is the 38-storey Fuji Xerox Tower on Anson Road by developer City Developments (CDL), which also intends to redevelop its seven-storey office and retail complex, Central Mall on Havelock Road. Near Clarke Quay is Liang Court on River Valley Road, which CDL and CapitaLand are jointly redeveloping into a mixed- use integrated development with residences, retail, serviced apartments and hotel.
A fortnight ago, URA proposed to conserve Golden Mile Complex, in view of its historical and architectural significance. The mixed-use development had failed to find a buyer in two earlier collective sale attempts. Should the conserved building be sold, incentives for the prospective buyer- developer include bonus floor area, the building of an additional 30- storey tower within the existing site, a partial development charge waiver on the additional floor area, the option to top up the lease on the land to 99 years, and the flexibility to adapt the building to a mix of possible uses.
Price mismatch
One of the challenges of collective sales today is the mismatch in price expectations. “Many owners are looking at pre- Covid prices, while buyers are looking at current or post- Covid prices,” says Edmund Tie’s Ong.
For strata-titled mixed-use developments with commercial components, the additional challenge is that some owners are using the premises to run their business, so the consideration is more than just real estate, she adds.
Perception of space has certainly changed due to Covid, especially since the “circuit- breaker”. “It’s not just about size but space as a utility or a service,” says Ong, who is part of the judging panel of the EdgeProp Excellence Awards 2020. This is Ong’s third consecutive year as a judge on the panel. But it is the first time that judging has been done virtually since the awards started in 2017.
Flexibility of space use is key, adds Ong. Beyond that, buildings need to prepare for 5G and Internet of Things ( IoT), she notes. “That’s something which is very necessary now, especially with more people working from home.”
Market disconnect
There seems to be a disconnect between the residential market and rest of the economy. On Oct 14, the Ministry of Trade and Industry reported that Singapore’s gross domestic product (GDP) slumped 7% y-o-y in 3Q2020. A day later, URA data showed private new home sales in September totalled 1,329 units — the highest monthly sales recorded in 2020 to date, and the highest since July 2018.
Private new home sales in 3Q2020 are estimated at 3,670 units, more than double that in the previous quarter and 11.9% higher y- o- y. For the first nine months of 2020, new private home sales totalled 7,532 units, 0.8% higher than the same period last year. The URA private home index rose 0.3% in 2Q2020 and 0.8% in 3Q2020, based on flash estimates.
New private home sales have remained resilient despite job retrenchments, wage cuts and a recession brought about by Covid. Ong feels that the recent crackdown on reissuance of options to purchase new homes is unlikely to have a significant impact on private housing demand. “The sheer amount of liquidity and the prevailing low interest rate environment are likely to continue to support the residential market,” she says. “This phenomenon is seen not just in Singapore, but in some of the other gateway cities too.”
‘ Inheritance’
In the local market, there is a growing trend of parents or grandparents helping some of the younger buyers to purchase their first property. “These parents and grandparents prefer to help with the downpayment of the first home now, rather than giving it away later as part of their inheritance,” says Ong.
“With the various macro- prudential policies in place, purchasers are generally buying responsibly,” she observes. “Most buyers are discerning today, and are buying for the long term.”
Besides buying in a good location, buyers look at projects which “align” with their own lifestyle needs in terms of flexibility of space use, health and wellness, which have become important factors, adds Ong.
There is also a lack of alternative investment instruments, especially on a risk-adjusted basis, acknowledges Ong. The key is one’s ability to ride through the trough, she notes. “At its worst, one can still use it as a weekend or holiday home, unlike other assets which cannot be enjoyed.”
The winners of the Marketing Excellence Award will be announced during the virtual ceremony of EdgeProp Excellence Awards on Oct 29, 2pm. Awards will also be given to developers who excel in innovative design, landscaping and sustainability.