Mixed-use developments making a comeback in Singapore's comeback

MIXED-USE developments are nothing new globally but they have seen a resurgence in Singapore over the last few years. The Singapore Central Business District (CBD) has been undergoing a transformation since the early 2000s with the government's push to encourage city living and ensure that the CBD remains lively during both the evenings and the weekends.

Historically, the CBD has been dominated by pure office buildings plus a number of hotels and supporting retail amenities.

A new push in city living started in the mid 2000s with residential developments such as The Sail @ Marina Bay which is located in the heart of the CBD in Marina Bay. Various developments of non-office uses have sprung up in the CBD.

Residential apartments have lined the streets of the CBD from Tanjong Pagar to Beach Road and a number of new hotels managed by international chains have emerged in the city area, either in the form of new buildings or revamped and reused existing buildings.

The transformation efforts were initiated by the Singapore authorities with the goal to turn the growing CBD area into a vibrant district round the clock by encouraging a mix of uses - commercial, residential, hotel and entertainment.

The key planning initiative that has driven this is the concept of white site zoning. The concept of the white site was first introduced by the Urban Redevelopment Authority (URA), in 1995, to give developers more flexibility in planning the composition of land uses on certain land parcels sold by the state through the Government Land Sales (GLS) programme.

Under the URA's white site guidelines, developers have the ability to decide on the mix of uses and the respective quantum of floor space of each use as long as the total permissible gross floor area (GFA) for the whole development is not exceeded.

Flexibility

Some sites also include a minimum fixed percentage of the development to be dedicated to a particular use authorised by the government, which is often office use in the case of the CBD area and how the remaining space will be used is up to the developer to decide.

Some recent GLS plots have also had a proportion of space stipulated for hotel use. The flexibility given on white sites allows developers to develop schemes that respond best to changing market conditions.

Developers therefore have a stronger chance of matching demand and supply. White sites can generally include commercial (office and retail), residential or hotel use, or a mix of these uses.

This also means that from the investor/developer's point of view, having a mix of asset classes also provides diversification of risks and mitigates the impact of any one asset class being in a down cycle.

Developers of mixed developments with a residential component have the benefit of using the pre-sale of the residential units to fund the upfront costs of the development.

The result of this government planning initiative has been the successful emergence of mixed-use developments that bring life to the CBD beyond usual business hours.

Mixed-use developments have proven to be very appealing to users across many global cities. Pacific Place in Hong Kong originally comprised three hotels (The Shangri-La, The Marriott & The Conrad), two office towers and a shopping centre when it was developed back in the late 1980s. The development has always enjoyed high occupancy rates as users enjoy the convenience of having multiple amenities located together under one roof.

From the office occupier's viewpoint, a hotel and strong retail offering provide excellent convenience to staff and visiting clients.

The hotels and retail, in turn, benefit from the catchment of office occupiers. Riding on the back of this successful synergy, this development has since been further enhanced with the addition of another hotel (The Upper House) and a third office tower.

Such successful developments in Singapore include Raffles City which was completed in the mid-1980s and comprises an office tower, two hotels (Swissotel The Stamford & The Fairmont Singapore) and a retail mall. Despite the growing presence of newer office developments in the CBD, Raffles City Tower has consistently maintained high occupancy rates.

More recently, Asia Square (2 million sq ft of office space, The Westin Hotel and over 60,000 sq ft of retail space) has become the first Grade-A office development in the CBD to encompass a 5-star hotel within the building.

There are a number of notable new schemes in the pipeline which include South Beach (500,000 sq ft of office space, a hotel, luxury residences and retail) and Tanjong Pagar Centre which includes a 900,000 sq ft office tower (Guoco Tower), a hotel, luxury residences and retail.

Key to success

Key factors contributing to the success of these mixed-use developments is scale and transportation links (MRT access). Besides a more productive use of space, mixed-use developments also bring about land use synergies.

Combining multiple uses within a single development allows developers to share common resources within the overall development, lowering development costs and maximising the use of the land.

A steady flow of foot traffic, drawn from residential occupants, hotel guests and office tenants, also serves to create buzz within the development throughout the day and night.

The cross-selling of services and amenities to stakeholders within the same development also builds up a small community, acting as a win-win and further encourages a time-efficient productive community. While retailers benefit from a stable catchment of shoppers, the occupiers likewise gain from the doorstep convenience.

For office tenants, the diverse mix of offerings within mixed-use developments undoubtedly raises the appeal of office space to their staff.

Besides the doorstep convenience offered by the retail component, the presence of hotels and residential units within the same development provides a viable option for office workers and visiting guests to reduce travelling time.

There is still very much value in single-use schemes but given the popularity of mixed-use developments with occupiers and therefore investors, we see further developments of this kind in the future, which will continue to add to the vibrancy of the CBD.

Planning for certain areas such as Marina Bay, given its greenfield nature, needs to be carefully orchestrated to ensure that supporting amenities are sufficient and mixed-use schemes prove effective in this regard.

Source: Asia Builders

PROPERTY LAUNCHES & INVESTMENTS

Property Launches & Investments

Mixed-use developments making a comeback in Singapore's comeback

Comments

Leave your comment