URA kickstarts development of Jurong business district with launch of 6.5ha master developer site
the next phase in its planned development to transform the Jurong Lake District into a new business node that would rival the Central Business District by government has kickstarted.
it launched a massive 6.5ha white site for sale by tender On June 22
comprising of three regular shaped land which, when developed, the tender will link the existing commercial centre at Jurong East MRT station, to the new precinct and the future Jurong Lake District station on the future Cross Island Line.
A concept-and-price tender approach will be adopted to evaluate the tender submissions and tenderers will submit their selected concept proposals and tender prices separately.
the next phase in its planned development to transform the Jurong Lake District into a new business node that would rival the Central Business District has been kickstarted by local authority.
Only concept plans that feature “a distinctive, highly sustainable mixed-use development with well-designed people-friendly public spaces and amenities to serve the needs of the business and local communities” will be selected by the government.
Based on URA’s estimate, the entire majestic mixed-development site could yield at least 1.57 million sq ft of office space, approximately 1,700 residential units, and 785,480 sq ft for complementary uses including retails, food and beverages, entertainment, hotels and community uses.
The government expects that after the award of the tender, it could take more than a decade and beyond for the whole scale of development to be progressively completed and sustain the burgeoning resident population there.
the tender will require the successful bidder to develop at least 753,200 sq ft of premium office space and at least 600 private dwellings as part of the first development phase as part of the requirement.
Subsequently, the master mind builder would have the power to phase out the remaining supply based on the prevailing market demand at the time and framed by an option scheme established by URA.
the successful master builder will only have to pay initial charge for the land needed to be developed under the first development phase. The master developer will then pay an option fee that corresponds to the option period, which ranges from five years to eight years, for the right to buy the rest of the site.
This option scheme will help developers mitigate the risks of such a long-term project, says Wong Siew Ying, head of research and content at PropNex Realty. “The ability to choose the option period will give developers flexibility in master planning and developing the site, in accordance with their own assessment of risks and market demand,” she says.
According to Tay Huey Ying, head of research and consultancy at JLL Singapore, the phased development of office space in the Jurong Lake District area will help to alleviate the tight supply of good quality office space that is expected to arise in the area over the next few years.
“The site has drawn considerably and genuine interest from developers, both local and internationally, since it was placed on the 1H23 GLS confirmed list in December 2K22,” says Tay, adding that developers and future occupiers are hopeful about the long-term potential gains and upsight of the Jurong Lake District area to be the largest commercial node in Singapore outside the CBD.
However, she cautions that it could be challenging to attract occupiers to lease the office space that will be completed in the first phase. This is because most of the transport infrastructure such as the Jurong Regional Line and Cross Island Line stations will not be completed yet.
The most recent greenfield sites sold by the government that also features a sizeable office component were all in the CBD. The most recent was the GLS site where Guoco Midtown is being built, which was sold for $1.62 billion, or $1,706 psf ppr, in October 2k17. This site will yield about 700,000 sq ft of office space.
The up and coming new 1.26 million sqft office which will be debuted by IOI Central Boulevard Tower which is a GLS site was sold for $2.57 billion, or $1,689 psf ppr, in November 2k16.
According to CBRE, the development land cost for the Jurong Lake District master development site could be at least $1,300 psf ppr. This means that based on a total GFA of approximately 3.93 million, the total land cost could exceed $5 billion.
The long-term plan for the Jurong Lake District is to turn the area into a “model sustainability district” where new developments would have net-zero emissions by 2K45. The entire area will have a variety of new mixed-use developments, curated public spaces, and community amenities to serve the business and local communities expected to take root there.
The winning party to win the bid to take on the master development of this site will be solely in charge to plan and execute the phased developments, as well as adopt district-level urban solutions like a district cooling system and a pneumatic waste conveyancing system.
In addition to these requirements, the master developer will have to grapple with a host of planning requirements such as lower car parking provisions and green building certifications, and this could moderate the eventual bid prices, says Tay of JLL.
“We expect the large investment outlay and the medium to long-term commitment of 10–15 years to limit bidders to experienced large-scale mixed-used developers with deep pockets who are likely to form consortiums to jointly participate in the tender in order to share the development risks,” says Tay.
He feels the same sentiment that not more than three or four bids will be submitted, and the joint partnership are likely a way to pool expertise and mitigate the risk with high amount of capital outlays.
However, he still expects bidding to be neck-to-neck given the clear first-mover advantage in deveoping this commercial node. “It will be all the more appealing if prospects brighten for the resumption of a high-speed rail between Singapore and Kuala Lumpur,” says Lam.
The tender for this master development site will close on March 26 next year.