Bid to turn CBD towers into homes hits a wall for some

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Published July 14, 2011

Bid to turn CBD towers into homes hits a wall for some

Applications for Fuji Xerox Towers, Cecil Court among those turned down by URA

By KALPANA RASHIWALA


(SINGAPORE) The Republic's planning authority may be acting to prevent a hollowing-out of office space in the old financial district.

Industry watchers say that a few office building owners have been turned down this year after they had applied to redevelop their properties to predominantly residential use.

These include Fuji Xerox Towers on Anson Road and Cecil Court on Cecil Street. Outline applications to redevelop these buildings into apartments with commercial space at ground level were rejected earlier this year. The building owners are understood to have been advised by the Urban Redevelopment Authority (URA) that their proposals are not in sync with the planning intention for the area.

Analysts said both sites are zoned for commercial use under Master Plan 2008 and, being located within the Downtown Core Planning Area, would be planned for office development.

DTZ senior director of investment advisory services Shaun Poh reckons that while URA will still honour any earlier conversion approvals - such as those that had been granted outline planning permission - it could be more stringent when it comes to assessing fresh applications seeking conversion of office buildings in the central business district (CBD) to residential use.

While no circular has been issued on the subject by URA, the view among some architects is that URA is unlikely to approve predominantly residential use of some of these sites zoned for commercial use, including those on Robinson Road and Cecil Street.

Market watchers note that this marks a departure from URA's earlier decisions to approve the redevelopment of oldish office blocks into residential projects (with ground-floor shops) such as Natwest Centre (into The Clift); 1 Shenton Way (into One Shenton); HMC Building (into Lumiere); the former Ong Building (into 76 Shenton); VTB Building (into Robinson Suites); and Aviva Building/Cecil House (into Cecil Suites).

Chow House is also understood to have received provisional permission for redevelopment into a similar scheme. UIC Building has been approved for redevelopment into a 60:40 residential/commercial scheme, and 70 Shenton Way into a 40:60 residen- tial/commercial project.

Such projects have been hailed in some quarters as aiding a rejuvenation of the old CBD and injecting life into the financial district after office hours.

Responding to queries from BT, a URA spokeswoman said: 'The existing Raffles Place and Shenton Way areas consist of prime office sites that are strategically located within the heart of the CBD, and are zoned for commercial use under the Master Plan 2008.

'Generally, the planning intention is for these sites to be developed primarily for office use and to develop the CBD as a core commercial office area, to support Singapore's growth as a business and financial hub. The development of the sites for commercial (office) use will also help to ensure that there is sufficient office space within the existing CBD to meet demand given the current positive economic climate and outlook.'

The spokeswoman added: 'Any application for rezoning and redevelopment for sites within the CBD, like any other land use rezoning proposals, will continue to be evaluated on a case-by-case basis.

'There is no automatic approval for any site to be rezoned to other uses. URA will continue to closely monitor market conditions over the next 2-3 years, and will review any change-of-use applications within the CBD on the merits of the proposal.'

Market watchers say adopting a case-by-case approach leaves URA with flexibility to respond swiftly and avoid being caught by fast-changing market conditions. In May 2007, amid an office shortage and skyrocketing rentals, URA came up with a temporary moratorium on conversion of offices to other uses in Singapore's Central Area (which includes the financial district) to prevent further depletion of existing office stock. It lifted the ban in late October 2008 during the global financial crisis.

'However, the financial crisis proved to be surprisingly short-lived, and Singapore office demand has recovered very quickly,' said an office building owner who declined to be named. 'If there are concerns about a potential tightening of office supply again, allowing developers to convert office space in the CBD to other uses may add 'fuel to the fire'.'

He added: 'The sense in the market is that URA has been less enthusiastic about conversion of offices in the CBD to other uses in the past half-year or so.'

Cushman & Wakefield Singapore vice-chairman Donald Han reckons tightening approvals for redeveloping office blocks into residential use would help to preserve the character of the financial district and support Singapore's development as a commercial hub.

'After all, people coming down from their apartments in pyjamas or flip-flops would seem a little out of place in Raffles Place,' he said, chuckling.

A developer noted that redeveloping smallish office plots in the old CBD into apartments may also lead to an increase in the car population and create congestion.

One view among some analysts is that URA may still selectively allow residential projects along certain stretches of the old financial district - for instance, where it had earlier approved redevelopment of office blocks into apartments.

Another observer highlighted the importance of balancing the need to inject a live-in population and vibrancy in the CBD with ensuring that Singapore has sufficient stock of core office space to maintain its status as a leading global financial centre.

A spokesman for City Developments, which owns Fuji Xerox Towers, when asked if the company has reapplied or made appeals for its application to redevelop 80 Anson Road, said: 'We do not have any immediate plans for the time being as the prospects for the office market are good.'

A spokesman for the Li family (of Carlton Hotel Group), which owns Cecil Court, said: 'At this moment, we have not made any other firm plans.'