Developers expected to convert office buildings into private housing

SINGAPORE: In May 2021, developer Frasers Property said it had secured provisional approval from the authorities to redevelop Bedok Point into a residential development.

The mall was the first of several retail and office buildings that subsequently shuttered for redevelopment, as developers reassessed their use of space amid the prolonged disruption from the Covid-19 pandemic.

Experts expect more commercial properties to be converted to residential or mixed-use developments, given the high demand for residential properties and how the residential property market has thrived during the pandemic.

Since the pandemic hit, at least five developers have announced that they will be redeveloping their properties to include residences.

When Frasers Property launched Sky Eden@Bedok for sale in September 2022, about 75% of its 158 units were sold on the first day. To date, 127 units, or 80%, have been sold.

Leonard Tay, head of research at Knight Frank Singapore, said: “If there is greater demand for residences as opposed to office buildings or retail malls in the current climate, developers will naturally shift to provide what the market requires, which is highest-and-best use.”

Citing data from the Urban Redevelopment Authority (URA), Tay said a comparison of price movements of different building uses in Singapore has been signalling that there is more demand for private homes.

URA data showed the private residential price index grew by 10.6% in 2021 and 8.6% in 2022, while the office price index fell 5.8% in 2021, but was relatively stable at minus 0.1% in 2022. The retail price index declined by 4.2% in 2021 and 7.8% in 2022.

The rise in demand for private homes in the past two years has been driven by housing and investment aspirations by Singaporeans, and steadily increasing household incomes in the past decade, said Tay.

“Now that borders are open post-pandemic, there might be more demand from foreign buyers attracted to Singapore’s stability and the modern affluent lifestyle that the city state offers,” he added.

Come August, CapitaLand Development will shut down JCube – a leisure and edutainment mall in Jurong East – and redevelop it into a 40-storey residential and commercial development. CapitaLand said the project will complement the government’s plans to bring new homes, along with new businesses, recreational facilities and amenities, to the Jurong Lake District.

In May 2022, a joint venture involving Chip Eng Seng, Chuan Investments and SingHaiyi Investments was granted approval by the URA to redevelop Maxwell House, a 13-storey commercial development, into a mixed development with 324 apartments and about 46,800 sq ft of retail space.

In the luxury segment, the former AXA Tower is being redeveloped into a 63-storey office, retail, residential and hotel project that will house Singapore’s highest super penthouse.

City Developments Limited (CDL) will build Newport Residences, another luxury condominium, on the site of the former Fuji Xerox Towers in Tanjong Pagar.

A CDL spokesman told The Straits Times that despite the recent increase in marginal buyers’ stamp duty for higher-value residential properties, the developer believes that “discerning buyers and investors will continue to be attracted to well-located and thoughtfully designed properties in Singapore, given the city’s status as a safe haven and hub for business growth and new opportunities”.

Newport Residences, which will be launched in the first half of 2023, is part of Newport Plaza – a 45-storey mixed-use development that will include 246 freehold apartments from the 23rd to 45th storeys, Grade A offices and a retail component.

“With this redevelopment, we are converting an office building which is over 30 years old and in a prime CBD (central business district) location, into a modern mixed-use development,” said the CDL spokesman.

“As businesses and office workers continue to adjust to the ‘new normal’, infrastructural changes must similarly follow suit,” the spokesman added, noting that the URA plans to transform the CBD into a vibrant place to live and play round the clock. — The Straits Times/ANN