SINGAPORE, 22 June 2023 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on the Urban Redevelopment Authority’s announcement on the tender launch for a Master Developer site at Jurong Lake District.
The URA today launched a Master Developer site at Jurong Lake District under the Confirmed List of the 1H 2023 GLS Programme. Comprising 3 parcels of land with “White” zoning, the site can yield about 1,700 residential units and no less than 146,000 sqm GFA of office space when fully developed over the next 10-15 years. The development of the site will be a game changer in the transformation of Jurong Lake District by revitalising and catalysing business and tourism activity. It also strongly complements the decentralisation drive of the authorities, to bring jobs closer to homes and improve sustainability.
The site is envisioned to be more than just the provision of mixed-use commercial or housing spaces. A model sustainability district, well-curated public spaces, experimentation of new development concepts and a car-lite transit-oriented work-live-play model – these are the myriad of expectations set for the successful tenderer. In particular, novel development concepts can help firms to further curate their unique hybrid work model to attract and engage talents.
To manage the business risk, the successful tenderer is allowed to develop the whole site in two phases. Phase 1 comprises a minimum of 70,000 sqm GFA of office space and 600 private housing units, which is relatively modest against the backdrop of a locality that has not seen a new private housing project launched since J Gateway in 2013, while existing commercial buildings have seen healthy occupancies. The 100% sell-out of J Gateway on launch day, coupled with a hiatus of 10 years, suggests that housing demand is already spoken for, notwithstanding the fact that J Cube would be redeveloped in the near future to a mixed use residential project. The option period, which starts from 5 years and can go up to 8 years, is clearly sufficient for the developer to assess market reception before triggering the option for the next phase. Given that the option fees is not refundable, however, bidders are likely to factor that in their underwriting.
The government is firmly planted in its intentions to develop a sustainable and viable business district beyond the downtown. To this end, financial considerations appear secondary; the tender price consideration is related to the backseat as a Concept and Price Revenue tender model is adopted. This Concept and Price Revenue tender is not new and was seen most recently in the Jalan Anak Bukit white site tender and the Parry Avenue assisted living site tender. Given the importance of this site to drive the next stage of development in Jurong Lake District, it comes as no surprise that a such a tender approach would be adopted. Only compelling concept proposals will be shortlisted to the next stage of evaluation which will be based on price only. Even so, the novel top-option, which was also introduced when for the Kampong Bugis White site (2H 2019 GLS Reserve List), will allow tenders that submit exceptional proposals the option to match the highest bid price.
With a 20% weight attached to the track record of tenderers in master planning sustainable and mixed-use projects of a similar scale (locally or overseas), the effect is to streamline the competition to all but the most established developers with strong track record and financial leverage. On this basis, we do not expect more than 3-4 bids for the site, and consortiums or joint ventures are likely a way to pool expertise and mitigate development risk. As a whole, Jurong Lake District offers unparalleled connectivity to neighbouring commercial and industrial nodes, such as one-north, Jurong Innovation District and Tuas Port, as well as a host of tertiary educational institutions in the West, while access to the CBD by train would take about 20-25 minutes.
Clear guidelines are put in place to limit strata subdivision to ensure quality of developments. With a minimum GFA of 20,000 sqm for each strata lot for office use, a maximum of 9-10 strata lots is plausible, but the master developer would have the full flexibility to curate the entire precinct. Besides the office, residential, hotel and serviced apartment uses, the rest of the development for each phase is to be comprised in a single lot which will allow the developer to have full flexibility on the retail, F&B, entertainment, recreational and community aspects for holistic work-live-play.
Given the vagaries of the economic environment and mounting headwinds, it is apt that a relatively lengthy tender submission period of nine months is provided, especially as developers are waiting for the dust to settle in the aftermath of April’s cooling measures. It will also provide more lead time for developers to prepare concept proposals that align with URA’s vision.
For further information, please contact:
Seah Li Ching (Ms)
DID: +65 6393 2369