Jurong Lake District Examining Master-developer Model
JLD impact
Prof Sing emphasized, for the JLD project, that the option schemes used in the land-bidding process are similar to those used in MBFC’s tender. The master developer is given up to 8 years to begin the second phase of development after Phase 1 has been completed. The option scheme provides developers with land security. It reduces the upfront cost of land and allows developers to carefully plan the timing. The land price will be capped by the option feature.
Inversely, large projects tend to be more complex. Unpredictable circumstances could affect the overall cost of the project, delay the construction or cause it to be delayed. The winning bidder will have more influence on the project’s pricing, since there are no other possible tenders to launch in the JLD in the near future. The office space planned in JLD will be increased by more than 10% with the completion of this development. 70,000 sqm is the estimated office area net-leaseable for Phase 1, which could be completed by 2029.
We are encouraged by the growth of the new Grade A office developments in the suburbs, such as Paya Lebar Quarter. The JLD project is a large and complex undertaking, with a high level of risk. We anticipate, if there are any bidders, that they would form consortiums or joint-ventures to bid for the site. Expect one to two bids. The highest bidder could be as high as S$1,000 psf for the project, to reflect its increased risk.
This rate was much lower than CBRE’s original forecasted rate of S$1,300/sf ppr for June 2023. The sentiment has changed since then. There are now more headwinds to the macroeconomy. The value of property in the region could be enhanced further if the JLD project is properly executed.
J’den’s recent launch, which consisted of 368 units, saw an 88 percent average sale price of S$2,451/psf during its launch weekend. This was the best performing project in a soft residential market.
This is a sign of confidence, knowing that there will be at least 1 700 residential units built within JLD over the next 15-years.
There are also master-developer bids for the Kampong Bugis in Kallang. Launch of the 8,29 ha plot, touted as the future waterfront living precinct due to the delay in soil remediation at the site.
JLD’s entire development, which covers 410 hectares, will include the newly renovated Chinese and Japanese Gardens. It will also feature a new Science Centre. It will create 100,000 additional jobs and 20,000 more homes between 2040-2050.
Bids on the JLD site are evaluated based on the concept and price revenue tender approach. Tenderers must submit their concept proposals separately from the tender prices.
The tender for a site measuring 6.5 ha (ha), which was placed on the market in June 2012 under the Government Land Sales Program using the Master-Developer Approach, will close next week (March 26).
The development is expected to be completed within 10 to 15 years and will provide 146,000 sq. m. of office space as well as up to 166,000 sq. The development also includes 73,000 sq m for uses like retail, food and drink and office space.
JLD will be Singapore’s most important business district located outside the city.
As the JLD has a mixed-use development, the master developer approach will help the government achieve its objectives to create a CBD and the vision for it faster.
The developer has the opportunity to create a more seamless, integrated and integrated development.
The master developer also has an incentive to ensure that development is successful and integrated rather than having several developers competing to develop different sites.
The JLD white site is comprised of three adjacent land plots that are to be developed in several phases.
The winning bidder will have to build 51,000 sq. m. (approximately 600 units) of housing and 2,700sq. m. for complementary use. A developer can divide the remaining supply into phases according to demand.
Presently, land in the state is usually sold plot-by–plot.
Precedents
Those interested in bidding for the JLD could learn a lot from previous master-developer projects.
The government has launched a number of large integrated projects that require master developers to be in charge of their design and development.
Suntec City is a site of 11.7 ha located in Singapore. It was opened in 1988 as part of a plan to establish Singapore as a major international convention and exhibition centre.
Suntec City consisted when it was finished of five office buildings, a shopping and entertainment complex, and a Convention and Exhibition Centre with a total Gross Floor Area (GFA).
The master developer approach was used to develop the Marina Bay Financial Centre (MBFC), a 3.55-hectare site in Singapore with a total area of GFA of 438,000 m2. It was launched as a CBD extension in 2005.
MBFC, a site developed by a joint venture comprising Cheung Kong Asset Holdings Hongkong Land and Keppel for S$1.91 Billion, or S$405 psf ppr (per square foot, per plot ratio), was purchased in two phases.
CBRE’s end-2009 data showed that the development had added 6% to the islandwide inventory and 43% to the CBD grade A office stock.
Tricia Song of CBRE, the head of research Singapore and South-east Asia said that even though MBFC added a substantial amount of inventory to the CBD at that time, the “oversupply”, was not deemed as such, because demand also increased rapidly.
The MBFC added quality to the offices segment, increasing the market’s prospects. Office rents doubled between Q3 and Q2 of 2008 as vacancy fell to under 1 per cent in CBD Grade A building cores.
“Most of office space was committed for Towers 1&2 before they got their temporary occupancy permit (TOP). Tower 3 reached its temporary occupancy permit in 2012 with 70 per cent occupancy and was fully occupied the following year, she added.
C&W estimated the gross effective rents of the three towers to be S$13.50 per square foot per month at Q4 2020, up from S$10.50 psf in Q42015.
Suntec City & MBFC were successful mega integrated project that played a critical role in the growth of Marina Centre & Marina Bay Districts.
The initial critical mass was needed to jump-start this transformation. These two projects have a far-reaching impact on the property rents, values and prices in their immediate area.
