People-centric Approach
The Urban Redevelopment Authority’s (URA) Draft Master Plan 2019 reflects Singapore planners’ people-centric approach to achieving sustainable growth through continuous innovation to enhance the attractiveness of the city. The key strategies highlighted in the Draft Master Plan 2019 will move Singapore in the right direction towards a sustainable and liveable city of the future. The draft master plan demonstrates the state planner’s attempt to keep in step with the growing popularity of a sharing economy alongside real estate transformation.
Bring Work-Live-Play back to the CBD
A CBD Incentive Scheme will offer an increase in gross plot ratio to encourage conversion of existing office developments to hotel and residential uses. This could be beneficial for many office developments which face challenges when it comes to land use zoning. As residential and hotel use typically have a lower capital value, it does not make sense for land owners to downgrade to those development options without the increase in the plot ratio. With the new CBD Incentive Scheme in place, it will make commercial sense to look at various development options.
A wider implication could also be on the office sector. Given that there could be a wave of redevelopments into residential and hotel segments to tap onto the CBD Incentive Scheme, office supply in the medium term could be even tighter if there are more conversions of office developments into residential and hotels. This could potentially cause Grade A CBD office rents to rise further as supply is taken off the market. Nonetheless, there could be positive outcomes as some companies would shift out of the CBD, which is in line with the government’s decentralisation strategy of commercial activities.
But in order for this CBD Incentive Scheme to take off, some tweaks might be required. For instance, current hotel development charge (DC) rates and the Additional Buyer’s Stamp Duty (ABSD) for developers are seen to be too prohibitive for developers to consider these development options. This is especially so for residential properties in the CBD where a significant portion of demand are from foreigners whom face a ABSD of 20%.
Bringing residential developments back to the CBD is not new, but the earlier efforts have not yielded very desired outcome. Hence I am of the view that co-living should be extensively adopted when the developers consider redevelopment options in the CBD in the future. Currently, only the affluent expatriates and rich locals are able to afford living in the CBD. However, in order to make the CBD truly work-live-play, we should also bring in people from all walks of life to the CBD. Co-living may help to achieve the intended consequence. However, the current rules such as having no more than 6 related people in one unit should be allowed to relax in order to increase the attractiveness of city-living.
The above is an excerpt from Cushman & Wakefield’s Policy Watch Singapore report. To read the full analysis, download it here.
