When Lakeside Towers on Yuan Ching Road in Jurong West was launched for collective sale on April 28, it was said to be strategically located in a high-growth area — the Second CBD in Jurong Lake District.

 

Lakeside Towers was put up for collective sale at the end of April, and the tender closed on May 28, the same day that Malaysian Prime Minister Mahathir announced that he was dropping the High-Speed Rail project 

 

A key attraction was the planned Kuala Lumpur-Singapore high-speed rail (HSR) terminus. “It will transform the whole of the Jurong Lake District into a brand-new prominent gateway into Singapore,” according to the press release by Lakeside Towers’ marketing agent, Huttons Asia.

The owners of units at the condominium are expecting at least $305 million from the collective sale. Including an estimated $57 million differential premium and for topping up the lease to a fresh 99 years, the land rate worked out to $1,125 psf per plot ratio (ppr).

 

The tender of Lakeside Towers closed on May 28 at 2pm, but it was overtaken by events when Malaysia’s recently elected Prime Minister Mahathir Mohamad dropped a bombshell by telling the press that he was scrapping the RM110 billion ($37 billion) HSR.

Terence Lian, Huttons Asia head of investment sales, who is handling the marketing of Lakeside Towers, declines to comment on the outcome of Lakeside Towers’ collective sale. He says, “We were riding on Jurong Lake District as Singapore’s second CBD, not so much the HSR.” Lian adds that the condo is also adjacent to the 90ha Jurong Lake Gardens, “the second-largest garden in Singapore”.

 

View of Jurong Lake Gardens and the Jurong Lake District (Credit: Huttons Asia)

 

Until May 28, Jurong Lake District’s prospects had never looked brighter. While Malaysians went to the polls on May 9 that ushered in Mahathir as its new prime minister (the second time around), Singaporeans learnt the details of the upcoming Jurong Regional Line. The 24km JRL will have 24 stations serving residents in Choa Chu Kang, Boon Lay and future developments in the Tengah area. It is scheduled to open in three phases from 2026.

Besides the JRL, the Land Transport Authority was also working on plans for the HSR project. On April 6, LTA had reportedly called for tenders for the design and construction of tunnels and associated facilities for the HSR. Construction of the 350km rail was expected to start next year, with the HSR service between Singapore and Kuala Lumpur to commence by end-2026. That journey would have taken just 90 minutes, while travelling time from Singapore to Iskandar Malaysia in Johor would have been cut to 15 minutes station to station.

When the HSR was first announced in February 2013, it was hailed by Singapore Prime Minister Lee Hsien Loong and then-Malaysian Prime Minis ter Najib Razak as a “game changer”. Then, in early May 2015, Lee announced that Jurong East would be the location for the HSR terminus in Singapore.

 

The HSR terminus came at a cost to the 2,800 golfers and country club members at Jurong Country Club and 2,650 golf members at Raffles Country Club, who lost their clubs through compulsory acquisitions.

 

Jurong Country Club was acquired by the government as the terminus for the High-Speed Rail terminus (Credit: Samuel Isaac Chua/EdgeProp Singapore)

 

Just a week after Prime Minister Lee’s announcement in May 2015, the Singapore Land Authority announced that Jurong Country Club’s 67ha plot would be acquired to make way for the terminus. The club was expected to hand over the land by November 2016 but was given an extension until February 2017.

Raffles Country Club met the same fate in January 2017, when the government announced that the site had been earmarked for the HSR depot and the Cross Island MRT depot. There are also plans for a train testing facility there. The site of Raffles Country Club, which had a 36-hole golf course, spans 143ha, more than double the size of Jurong Country Club.

“The government hasn’t cleared the sites yet,” says an industry source who declined to be named. “It has done the planning and the soil testing.” The Singapore government had announced last August that it was considering the sale of large land parcels in Jurong Lake District over the next few years. It aims to create 100,000 new jobs and add 20,000 new homes in Jurong Lake District, which, at 360ha, is about the size of Marina Bay.

National Development Minister Lawrence Wong said at the time: “With that, we can create a critical mass of developments once the HSR terminus starts operations by end-2026.”

 

Jurong Gateway, the new business district of Jurong Lake District, with its new developments centrered around Jurong East MRT interchange station (Credit: Samuel Isaac Chua/EdgeProp Singapore)

 

In the 2008 URA Master Plan, the area around the Jurong East MRT station was designated the CBD of Jurong Lake District. Called Jurong Gateway, it is where many of the new mixed-use commercial develop ments — such as JEM, Westgate and Vision Exchange — are centred around. Other malls, including J Cube and IMM, as well as amenities such as the 557- room Genting Hotel Jurong and the Ng Teng Fong Hospital are also located at Jurong Gateway.

 

Now that the HSR has been called off, what would it mean for the golf course sites that were acquired for the HSR terminus and depot?

The government had said it was going ahead with compulsory acquisition of the land occupied by Jurong Country Club regardless of whether the HSR project was derailed, according to the Jurong Country Club committee. Besides the HSR terminus, the land was to be used for future mixed-use developments, such as offices, malls and residences.

Raffles Country Club members have until end-July to vacate the premises and hand over the land to the government. “RCC could be granted an extension to hand over the land under the circumstances,” says a source who declined to be named.

 

Jurong Country Club has vacated the 67ha site and handed it over to the government (Credit: Samuel Isaac Chua/EdgeProp Singapore)

 

Members of Jurong Country Club handed over the site to the government last year and are still appealing for a higher compensation. They had claimed a compensation of $168 million, but they were awarded $89.8 million. The price for the land translates into $12.45 psf. Raffles Country Club’s compensation was said to be just as low.

“Since the Singapore government has already acquired the sites — and these are good waterfront sites — they could put them in the landbank for future residential, commercial and mixed-use integrated projects. As the next-generation CBD, Jurong Lake District could have its own distinctive attributes,” says Tan Tiong Cheng, Knight Frank president for Asia-Pacific.

 

The latest government land sale in the west was in January, involving a site on West Coast Vale, just a 10-minute drive from Jurong East. The 210,883 sq ft, 99-year leasehold residential development site on West Coast Vale was sold to City Developments (CDL) for $472.4 million, or $800 psf ppr.

The psf price was 35% higher than the adjacent site purchased by CSC Land Group in February last year. CSC Land launched Twin VEW — its new project on West Coast Vale — on the weekend of May 5 and 6, and saw 449 out of a total of 520 units in the twin tower development snapped up, which translates into a take-up rate of 85%. The average price of units sold that weekend was $1,399 psf.

 

Twin VEW was launched on the first weekend of May and saw 85% of the units taken up (Credit: Albert Chua/EdgeProp Singapore)

 

While the Jurong Lake District master plan may be derailed in the short term by the scrapping of the HSR, its long-term prospects remain undiminished, says Desmond Sim, CBRE head of research for Singapore and Southeast Asia. “After all, the master plan for the Jurong Lake District was unveiled in 2008 and it was already earmarked as a growth area 10 years ago.”

Besides property developers, homeowners and property investors have also been looking forward to the uplift in property prices from the new developments and infrastructural projects in Jurong Lake District, especially with the increased connectivity from the JRL and HSR. Demand for homes in and around Jurong Lake District has been supported by the improving sentiment in the wider market, notes Tay Huey Ying, JLL Singapore head of research and consultancy. “The HSR was merely a sweetener. Its uncertain fate will not dent demand nor prices in and around the locality.”

Alice Tan, head of research and consultancy at Knight Frank Singapore, says: “In the past, property prices in Jurong lagged behind other regions in Singapore.” Private housing stock in the western region also grew the least, points out Tan. “This means inherent advantages for new residential developments in the region, especially in Jurong Lake District, compared with those elsewhere.”

 

It also means that ageing developments in Jurong have “high redevelopment potential”. None of the 28 collective sales worth $9.03 billion that took place this year were located in Jurong. Projects in Jurong were also absent from the 33 en bloc deals totalling $8.7 billion that were transacted last year.

 

About 70% of the owners at Ivory Heights have agreed to a collective sale so far (Credit: The Edge Singapore)

 

The first whiff of a collective sale in Jurong came from Ivory Heights in Jurong East. A privatised HUDC estate completed in 1986, the 654-unit Ivory Heights occupies a sprawling land area of 825,502 sq ft.

Last October, Ivory Heights’ reserve price was said to be $1.34 billion. If it is successfully sold, it will be the first collective sale to cross the billion-dollar threshold this year and match the record set by Farrer Court, which was sold for $1.3388 billion in 2007. The Ivory Heights site has a 100-year lease starting from 1986. Marketing agent SLP International estimates the lease top-up premium at $160 million and the land rate at $979 psf ppr.

So far, about 70% of Ivory Heights owners have agreed to the collective sale.

 

Over 80% of the wners at Lakeside Apartments have agreed to a collective sale of the project at $240 million (Credit: SLP International)

 

The collective sale wave has taken off at Jurong West, with three adjacent developments attempting a collective sale. It started with the 160- unit Park View Mansions fronting Jurong Lake Gardens. Launched for collective sale on March 8, the tender closed on April 20. The price tag of Park View Mansions was $320 million, according to Huttons Asia, the marketing agent. After factoring in $157 million in differential premium and lease top-up, the land rate works out to $1,183 psf ppr.

Eighty per cent of the owners at Lakeside Apartments, which is adjacent to Park View Mansions and faces Jurong Lake Gardens, have agreed to a collective sale. The collective sale committee (CSC) of Lakeside Apartments and marketing agent SLP International will hold a meeting with the owners on June 1, with the tender to be launched a week or two after that. The site has a reserve price of $240 million. If an estimated $58 million in differential premium and lease top-up were included, the price would work out to $1,057 psf ppr.

Lakeside Apartments is also adjacent to Lakeside Towers. All three projects have leases that start from the 1970s: Park View Mansions’ 99- year lease, from 1976; Lakeside Towers’ lease, from 1975; and Lakeside Apartments’, from 1977. “Regardless of the status of the HSR, the leases of these projects will continue to dwindle,” notes Nicholas Mak, executive director of ZACD Group. “The owners are therefore motivated to go ahead with their collective sales.”

 

 

The 738-unit J Gateway saw almost all units snapped up on the first day of launch at the end of June 2013 (Credit: Samuel Isaac Chua/EdgeProp Singapore)

 

Within Jurong East, the only new private condo is J Gateway, a 738- unit private condo by MCL Land. Almost all the units in the project were sold when it was launched on June 28, 2013. The launch date coincided with the announcement of the total debt servicing ratio (TDSR) loan framework that evening. Some units were returned, but property agents reported that they were also quickly taken up by other investors who had wanted to purchase a unit but did not get a chance.

While the average price achieved on the first day of launch was $1,480 psf, many of the one-bedroom units at J Gateway were sold at more than $1,700 psf. The highest price achieved on launch day was $1,774 psf for two one-bedroom units on the 34th floor. Since the project’s completion in 2016, prices have hit a new high of $1,900 psf — for a 474 sq ft unit on the 16th floor that went for $900,000 in February this year.

CBRE’s Sim points out that J Gateway was launched two years before the announcement of the location of the Singapore HSR terminus. “It shows that homebuyers and investors were already buying into the future growth of the Jurong Lake District without the HSR terminus,” he says.

ZACD’s Mak agrees. “There are still many economic factors going for Jurong Lake District,” he says. “The HSR terminus was just one of them, and it was a nice-to-have. But the other factors are still intact.”

 

 

Jurong Lake District has a large residential catchment, about 1.5 million sq ft of Grade-A office space and over 4 million sq ft of Business Park space (Credit: The Edge Singapore)

 

The Jurong Lake District already has a large residential catchment, MRT connections, easy access to expressways, more than four million sq ft of business park space at the nearby International Business Park and 1.5 million sq ft of Grade-A office space, says Chris Archibold, JLL head of markets. “The location already has all the facets to make it work. It just needs a critical mass of Grade-A office space at a reasonable discount to the main CBD.”

Beyond commercial, the government has also focused on the residential and lifestyle aspects in Jurong. There will be a new Lakeside Village connected via bridges to the Japanese Garden and Chinese Garden, which will be part of the bigger Jurong Lake Gardens, Singapore’s largest suburban garden.

In addition, new residential developments have been launched in the neighbourhood of Jurong West. MCL Land followed up the success of J Gateway with two other private condo launches in Jurong West — Lakeville and Lake Grande, which are developed on 99-year leasehold sites purchased in government land sales.

 

Crowd at the launch of Lake Grande where 61% of the 710 units in the project were taken up on the first weekend (Credit: MCL Land)

 

Lakeville, a 696-unit private condo with three commercial units, was launched in May 2014 at an average price of $1,300 psf. The project is fully sold and was completed last year. The prices of units that changed hands from last September to March this year ranged from $1,305 to $1,421 psf. The 710-unit Lake Grande was launched in July 2016, and 61% of the units were snapped up on the first weekend at an average price of $1,368 psf. The project was fully sold earlier this year at an ave rage price of $1,377 psf. “There hasn’t been a new launch in the Jurong area since Lake Grande,” says JLL’s Tay.

The government has said about 160ha of the 360ha Jurong Lake District has yet to be developed. More than 40% of the mixed-use business area has been set aside for residential purposes.

“Without the HSR terminus, developers will have more sites to choose from in future government land sales,” says Knight Frank’s Tan.