Evolving market: A general view of Singapore’s central business district (CBD). CLD is hoping to develop an alternative to the existing CBD for its next big project. — AFP
SINGAPORE: Three years ago, CapitaLand Development (CLD) emerged as the private development arm of Singapore’s biggest developer upon the group’s restructuring and the listing of CapitaLand Investment as a separate entity.
The thinking behind the restructuring was straightforward: Stock market investors generally do not like long-gestation projects, the reason many listed developers trade at a discount to net asset value.
Hence, most of the CapitaLand development projects – a good part of them in China – were shifted to the private arm, and wholly owned by investment firm Temasek.
The stabilised ones went to the listed arm, CapitaLand Investment, which currently has a market capitalisation of more than S$13bil.
In 2023, the private arm – CLD, as its employees like to refer to their company – was handed to veteran real estate figure Jonathan Yap to run.
Now, amid a general slowdown in China, CLD’s biggest overseas market, Yap is making a huge bet at home – together with four other developers, he has tendered for the master-developer site in Jurong Lake District (JLD).
As per the Urban Redevelopment Authority’s (URA) announcement of the tender launch in June 2023, the 6.5ha white site comprises three plots of land in JLD, linking the existing commercial centre at Jurong East MRT interchange station and the future JLD station of the Cross Island Line.
The planning parameters include at least 146,000 sq m of office space, about 1,700 dwelling units and 73,000 sq m of gross floor area for complementary uses, such as shops, restaurants, entertainment, hotel, community uses or more offices.
The project, set to become Singapore’s largest business district outside the central area, will be progressively completed over 10 to 15 years.
“We want it to be an alternative to the central business district, even if not on the same scale,” said Yap.
“The URA’s thinking is to scatter office options across the island – JLD will be a self-sufficient option with residential, hotels and retail amenities. A complete solution in itself.
Moving to a new level
CLD’s hoary ancestry dates to the days of DBS Land and Pidemco Land, with the addition of Ascendas-Singbridge in 2019 enlarging its scale significantly. That gives it the bulk to take on big projects.
“It is a huge bet,” acknowledges Yap, whose firm has a 25% stake in the JLD venture, now awaiting government sanction. “For a single project in Singapore, this is probably the largest ever, but at the same time, I have other partners. So, the effective stake is a bit more measured.”
The partners haven’t revealed the bid price. A top property analyst cited by The Business Times in March said she believes the master-developer site could fetch between S$3.5bil and S$3.9bil for the entire site.
Asked about the estimate, CLD noted that such estimates were likely based on standard government land sales with three- to five-year timelines, which did not fully consider the unique requirements of the JLD master-developer site.
Aside from CLD, which has a 25% stake, the consortium comprises City Developments, Frasers Property, Mitsubishi Estate and Mitsui Fudosan (Asia). It submitted two bids with different concept proposals for the 6.5ha government land sales white site.
Greenfield projects are huge opportunities to do something original, and different. The vision is to have seamless pedestrian flows and what is described as “intuitive traffic flow”.
And while the authorities’ sustainability target is for JLD to achieve net-zero emissions by 2045, Yap said “we are trying to bring it forward in a few years” at the JLD master-developer site.
A bigger question is whether companies – and importantly, employees – would want to move there. Choice office locations are said to play a role in attracting and retaining top talent, and there have been recent reports of a drop in office occupancies in the Changi Business Park area.
Not an easy task
“It will not be a walk in the park,” said Yap. “A lot of thinking will be needed, especially on the office front. I imagine the residential and retail segments will be easier to market.”
Underscoring confidence in the location was the strong performance of J’den condominium in November. The 368-unit project on the site of the former JCube mall in Jurong East was the top-performing new launch for 2023 after 88% of units were sold at an average price of S$2,451 per sq ft over its launch weekend.
“For a decade, there hadn’t been a new launch in core Jurong,” noted Yap. “The buyers range from singles to young families. Many visitors to the show-flats came with their parents, and that suggests a joint decision.”
As for the offices part of the project, Yap believes that companies will do their calculations on what part of their activities needs to be performed out of the CBD, and what can be located elsewhere. Multinational companies routinely do that on a regional basis, so there is no reason why they should not do similarly on a Singapore island-wide basis.
Existing template
Four decades ago, when Science Park was developed, it too was a hard sell. But a newly opened serviced residence in the area, Citadines Science Park, has already achieved close to full occupancy.
Today, Science Park is a thriving area and being given fresh life; in June 2023, CapitaLand unveiled the Geneo life sciences and innovation cluster in the 55ha park, offering about 180,600 sq m of gross floor area with work-live-play elements when fully completed in 2025.
Totalling about S$1.37bil in investments, Geneo marks the latest phase in CapitaLand’s multi-stage precinct rejuvenation of Science Park.
According to a company release, when Geneo is fully operational, Science Park’s working population is expected to increase by some 75% to about 21,000 from the current 12,000. CLD is also planning to launch Science Park’s first residential project.
While the big challenges of the day may be around sales and marketing, anyone needing proof of CLD’s ability to execute projects needs only to visit Raffles City Chongqing in China.
A giant, vertically built riverfront urban district comprising a retail podium and eight skyscrapers, and occupying 9.2ha looking out on the confluence of the Yangtze and Jialing rivers, it has become a Chongqing landmark.
But while the hotels have high occupancy, and retail and the residence units have sold well, the take-up of office space is slower.
“It is early days and a very big project in terms of both scale and ambition,” Yap said of Raffles City Chongqing. “We are still in the phase of settling the investment.”
About half of CLD’s asset exposure of roughly S$22bil is in China, whose economy has been slowing – in part because the Xi Jinping administration has taken decisive steps to cool what was a red-hot property sector, which forms a significant chunk of gross domestic product.
This, as Yap describes it, stalled a long “uni-dimensional, surreal” period of growth in real estate, whereas most markets see cycles of between five and eight years in the sector. — The Straits Times/ANN
