Master developer of Jurong Lake District could reap rich rewards
Five property giants from the consortium are expected to start working soon, and will help JLD become the second CBD. CapitaLand Development, City Developments Limited (CDL), Frasers Property (TQ5 0%), Mitsubishi Estate and Mitsui Fudosan Asia (Asia), for submitting joint bids with different concept proposal for the Jurong Lake District master-developer. The consortium of five Asian property giants was the only bidder in the tender for this JLD site, which closed on the 26th March.
Construction costs and interest rates are still high. As things stand, homebuyers face tough property cooling measures. Office space requirements have also changed as more businesses are adopting hybrid models, which combine working in the office with remote working. Add to this rising geopolitical pressures and an uncertain global economic outlook.
In the context of the above, any project involving property development is fraught with risk. The risks are higher for large-scale projects with a long gestation, particularly if they’re intended to transform a particular area.
Risks are high for any developer who takes on the 99-year leasehold JLD White site. This 6.5-hectare property can produce a maximum of 365,000 square meters (sqm) or 3.9 million sq ft (sqft).
Site will be used primarily for office and residential purposes. The site can be used for retail, F&B and entertainment, hotels, sports, recreation and community purposes. Office space must be at least 1.5 million square feet.
The development of the JLD Master-Developer Site could easily take 10 years.
The five-party consortium, which has put in a lot of work to submit its bids, will be relieved that they are the only contender. The consortium will have to wait a long time to find out if they won.
Concept evaluation
Evaluation of tenders submitted for this JLD site is based on the Concept and Price Revenue Tender. A committee of the Urban Redevelopment Authority will evaluate concept proposals for their master plan, design concept, public realm quality, sustainability, and track record.
The next evaluation stage will only include compelling concept proposals. This will be done based on the price. There have been state land tenders in which concept proposals were first evaluated. This approach could help ensure that the JLD site is constructed in accordance with the vision of the authorities.
JLD, as part of URA’s decentralisation policy, will be developed progressively to become Singapore’s biggest business district outside of the city center to meet diverse business needs. JLD will be developed into a sustainable district, with new developments aiming to achieve zero emissions by 2045.
The master-developer strategy for the JLD White Site can enable a developer, to master plan the site comprehensively to integrate various uses, to coordinate the implementation of the development, and to adopt district-level solutions.
The tender for the Marina Bay Financial Centre site (MBFC), which was going to be developed to extend the Central Business District (CBD), was won purely based on the price. This site, located in Marina Bay, had a total GFA of 438,000 sq. m.
The MBFC has contributed to Singapore’s development as a financial hub, it has expanded the CBD, and it has added a lot to the skyline of the city.
Be flexible
The consortium partners who bid for the JLD Site have a solid track record in Singapore or overseas, and are committed to sustainability. Local parties CapitaLand CDL Frasers, which together hold 75 percent of the consortium’s stake are some of Singapore’s oldest property groups. It is hoped that either one or both of the concept proposals will be deemed acceptable, and that JLD’s site will soon be awarded.
The risk is that the submitted concept proposals will not be evaluated. The bid price for this JLD site may also be too low for the government to accept. Does S$900 per sq. foot for the whole site, which is S$3.5 billion, suffice? It is possible to be very flexible when evaluating concept proposals, and then deciding on whether or not to accept the price.
Since the JLD site was put out to tender in more than nine-months ago, it is no doubt that many developers from Singapore and other countries have taken a look at it. Groups involved in the construction of MBFC and other high-end developments have stayed away.
URA is right to take the lead when it comes to envisioning JLD’s growth as Singapore’s second CBD. The government invests in transport infrastructure to support JLD’s development.
Private property developers will be crucial in making JLD Singapore’s second CBD. Private property developers risk capital and dedicate manpower to create spaces that will hopefully attract users. If the outcome is poor, there will be financial and reputational harm.
The financial return of a developer will be greatly affected by whether the JLD office space achieves a monthly rent of S$8 or S$10 per square foot or reaches 90 percent occupancy instead of 80 percent.
Singapore’s second green CBD
JLD is located near the Jurong Innovation District and Tuas Port. It’s also close to two of Singapore’s best universities. Will companies be worried that they can’t attract human capital to the east because JLD is so far away?
It is a challenge for the master developer to make the JLD white site develop.
We should be happy that five of the most prominent Asian property groups are now in the race.
What is really exciting, however, is the possibility that JLD will be a sustainable model district, and a showcase for how place-making can create an area of world-class living, working, playing and learning.
The master developer of the JLD site and Singapore could reap rich rewards if JLD becomes the second CBD and is the first choice for both local and international businesses in the green economy.
