Property consultants differ on impact of future new districts

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Property consultants differ on impact of future new districts

Friday, March 10, 2017

by Lynette Khoo
[email protected]
@LynetteKhooBT


PROPERTY consultants are mixed in their views on whether the planned development of Punggol North and Kampong Bugis will have a significant impact on property prices and rents.

While most expect industrial rents in Punggol North to be higher given the expected broader range of allowable uses and better facilities, they are not singing the same tune for residential prices.

Their comments came on the back of Minister for National Development Lawrence Wong's announcement in Parliament on Tuesday that Punggol North is designated as Singapore's first "Enterprise District" where new planning concepts will be tested out. It will focus on cybersecurity and digital media industries.

JTC, the appointed master developer for Punggol North, will have flexibility to develop the district based on land use and gross plot ratio guidelines at the district level.

A wider range of uses for industrial space will also be allowed in Punggol North, similar to the Woodlands pilot project whereby JTC is building a multi-tenanted building within Woodlands North Coast.

Over in Kallang, Kampong Bugis is also identified as a new residential precinct where a master developer hailing from the private sector will have flexibility to plan and develop the entire 17-ha site in phases. It could potentially yield up to 4,000 new homes.

The news excited property consultancy firm Edmund Tie & Company into issuing a report on Thursday, saying that with more job opportunities and retail offerings, prices and rents of residential properties in Punggol and Sengkang are likely to improve when the Enterprise District is up and running.

"The median resale price of a four-room HDB flat in the area is S$445,000, which is substantially lower compared to the median price of a 4-room HDB flat in Queenstown at S$700,000. There is high capital appreciation potential in the long term if the Enterprise District successfully becomes the next one-north," said Lee Nai Jia, head of South-east Asia research at Edmund Tie and Company.

"The rejuvenation of the Kallang area will also help boost rents of the residential properties in the area, which have been resilient given its proximity to the CBD."

Savills Singapore research head Alan Cheong reckoned that a major makeover in the Kallang area may lift retail rents there "many levels up".

"From URA data, for the period of January to March 2017, median retail rent in the Kallang planning area is S$4.89 per square foot per month (psf pm), ranking it third lowest among all the planning areas here. For shophouses, median rents over the same period are ranked third from the bottom jointly with Changi and for HDB shops, median rent in the Kallang planning area is just S$2.48 psf pm, the second lowest," Mr Cheong said.

Other property consultants, however, are tempering their expectations amid a lack of details and the long development periods of such large-scale projects.

International Property Advisor key executive officer Ku Swee Yong noted that it took 17 years for the 200-ha one-north precinct in Buona Vista to be planned and developed by JTC. "Punggol/Sengkang will also be competing with Jurong Innovation District and I believe the ever expanding NUS-Ayer Rajah-Science Parks," he said.

While there will be more job opportunities to be created, Mr Ku felt that to assume potential for high capital appreciation in residential prices in the long term in Punggol/Sengkang may be "a stretch of the imagination" for now. "And with the pace of technology moving faster and faster, we need to be nimble to react. Perhaps within 10 years, the concept for Enterprise District will be morphed into something else?"

Most consultants think that more flexible use of industrial space, higher-skilled tenants, and better building specifications in Punggol North should translate to higher rents. But Mr Ku noted that any impact on industrial rents may be confined within the district, since the new land-use guidelines would not apply to current industrial buildings.

Cushman & Wakefield research director Christine Li reckoned that it will take at least two property cycles for the Enterprise District to be fully developed to attract talents and jobs.

"It's certainly a very exciting cluster to complement the next phase of economic development, and hence it's good for the north-east region where there seems to be a lack of commercial activities apart from the two major suburban shopping malls," she said.

"However, if we look at the supply in the north-east region over the recent years, there seems to be a lot of housing options for prospective tenants. In comparison, one north area has fewer housing options which helped to support the rents in the vicinity," Ms Li said.