The government has launched the next stage of its plan to develop this Jurong Lake District into a new business district that would compete with Central Business District. Central Business District.
The 22nd of June was the day it announced the huge 6.5ha white site available for tender.
This tender comprises three parcels of land that, once constructed, will connect the existing commercial center in Jurong East station of the MRT to the precinct that is being built and the planned Jurong Lake District Station that will be on the soon-to-be completed Cross Island Line.
The Myst sales gallery makes it a good option for homebuyers and investors looking for a new condo in Singapore’s coveted Bukit Panjang district.
A concept-and-price approach to tenders is used to assess tenders, and tenderers will submit their preferred concept ideas and tender prices in separate submissions.
The government is expected to select concept plans submitted which include “a distinctive, extremely sustainable mixed-use project with well-designed accessible public spaces and amenities that serve the needs of business or local residents”.
Only “compelling” concepts that are shortlisted will be considered by their cost, URA says.
Based on the estimate of URA the whole development site will yield 1.57 million square feet or office area, around 1,700 residential units and 785,480 square feet to be used for additional uses, such as restaurants, shops entertainment, hotels, and other uses for the community.
The government is expecting that after the contract is awarded it will take anywhere from 10-15 years to allow the entire extent of development to be completed, and support the burgeoning residents there.
While the potential for short-term risk is compelling, there are risks in the short-term.
The conditions of the bid will require the winning bidder to build at minimum 753,200 square feet of office space, and at minimum 600 housing units as part of the initial development phase.
The master developers will be able to reduce the remaining stock in accordance with the current market demand and as outlined by an option plan formulated by URA.
Based on this scheme The successful master developer will be required to pay in advance for the land to be developed in the initial development phase. The master developer is then required to pay an option fee which is proportional to the duration of the option period which can range from five to eight years for the option to purchase the remaining site.
This scheme of choice will assist developers to reduce the risks associated with the long-term nature of a project as per Wong Siew Ying, head of content and research of PropNex Realty. “The possibility of choosing the period of option will allow developers the flexibility to plan masterfully and building the site in line with their own assessments of market demands and risks,” she says.
Based on Tay Huey Ying, the head of research and consulting of JLL Singapore, the phased expansion of office spaces located in areas like the Jurong Lake District area will assist in alleviating the limited availability of high-quality office space anticipated to develop within the coming years.
“The site has garnered substantial interest from developers as well as those from foreign since it was added on the GLS confirmed 1H23 schedule in 2022.” Tay says. Tay she adds that developers and potential tenants are optimistic regarding the long-term prospects of this area. Jurong Lake District area to be the most commercially-oriented area in Singapore beyond the CBD.
She warns, however, that it may be difficult to get occupiers interested in leasing the office space which will be built in the initial phase. This is due to the fact that a majority of the transportation infrastructure, like Cross Island Line and the Jurong Regional Line and Cross Island Line stations won’t be fully operational until the end of the year.
The cost of land could go over $5 billion
Recent greenfield sites purchased by the federal government, which also has offices of a significant size were located in the CBD. The most recent one was the GLS site in which Guoco Midtown is in the process of being constructed that was sold for $1.62 billion which is equivalent to $1,706 per sq ft per in October 2017. The site is expected to yield 700,000 square feet of offices.
The planned IOI Central Boulevard Tower will bring about 1.26 million square feet of office supplies to the market. This GLS site was bought at $2.57 billion which is $1,689 per sq ft ppr in November 2016.
According to CBRE the development cost of the land to develop this Jurong Lake District master development site is likely to be around $1,300 per square foot per acre. That means, based on an overall GFA of about 3.93 million which means that the total cost for land could be higher than $5 billion.
“We believe that Phase 1’s minimum need to be 35% of the total area, which is why it could cost anywhere from $1.8 billion to $2.5 billion. The office component will comprise at minimum 40% of the development, whereas residential development is limited to 45% of total development” states Tricia Song, the head of research Southeast Asia, CBRE.
She says: “With this focus on the development of offices decentralised we believe there should be a small number of greenfield office sites within the CBD accessible through GLS. GLS soon. In the future the CBD will undergo a rejuvenation thanks to old office buildings being transformed to mixed-use development”.
Stringent development conditions
The long-term goal of Jurong Lake District. Jurong Lake District is transform the region into the area of a “model sustainable district” where all new developments would achieve net zero emissions in 2045. The entire area will feature various new mixed-use development, curated public spaces, as well as community facilities to support the local and business communities that are expected to be established there.
The winner of the bid to be the one who takes on the development masterplan for the site is responsible for develop and manage the phases of development and also adopt district-level urban solutions such as district cooling systems as well as an automated waste transport system.
Additionally to the above demands in addition, the principal developer will also have to deal with a variety of other planning requirements, including less car parking or green building certificates and this can affect the potential bid prices, says Tay from JLL.
“We anticipate the substantial expenditure and long-term commitment in the medium to 10 to 15 years will restrict bidders to large-scale experienced mixed-used developers with a large amount of cash that are likely to join together to take part in the tender so that they can share the risks of development,” says Tay.
“With a 20% weighting tied to the performance of tenderers master-planning mixed-use and sustainable projects on similar size (locally or internationally) The result is to reduce the amount of competition to any developers with a solid track of financial leverage and a track record,” says Lam Chern Woon the head of research and consultancy for Edmund Tie.
He agrees that not greater than four or three bids can be made and that consortiums or joint ventures could be a method to pool knowledge and reduce the risk of development.
But, he expects the bidding process to be competitive due to the obvious first-mover advantage the development of this node for commercial use. “It is more appealing if there is a brighter outlook for the return of an expressway that is high-speed that runs between Singapore to Kuala Lumpur,” says Lam.
Tenders for the master-development site will be closed on the 26th of March next year.