Bugis enters new chapter in ongoing rejuvenation
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - Earlier this month, the $700 million collective sale of Golden Mile Complex — the iconic mixed-use development located on Beach Road fronting the Kallang Basin — came one step closer to finalisation with the Strata Titles Board granting the sale order for the transaction on Aug 3.
The legal completion of the en bloc sale to a consortium comprising Far East Organization, Perennial Holdings and Sino Land is slated for November this year, with the building to be handed over to the developers next May. The landmark transaction will see the consortium transforming the conserved building into a new mixed-use integrated development comprising office, retail and residential components. (See potential condos with en bloc calculator)
On the other end of Beach Road is the construction of the new Shaw Tower, which commenced in May. The mixed-use development, which includes 435,000 sq ft of Grade A office space and a five-storey podium with 15,700 sq ft of retail space, will replace the original building that dates back to the 1970s. The redevelopment, managed by Lendlease, is expected to be completed by 2025.
The two projects are the latest milestones in the wider, long-term redevelopment taking place in the Bugis area, says Knight Frank’s head of consultancy Alice Tan. During the EdgeProp Singapore NDP Master Plan Master Class webinar on Aug 13, Tan spoke on the ongoing rejuvenation happening in Bugis and how it heralds a bright outlook for developments in the area.
The en bloc sale of Golden Mile Complex to a consortium comprising Far East Organization, Perennial Holdings and Sino Land is slated for legal completion in November (Picture: Samuel Isaac Chua/The Edge Singapore)
A history of transformation
Bugis has seen various iterations of urban rejuvenation over the years. In the 1980s, the Singapore government embarked on the redevelopment of Bugis Street in a bid to clean up the area, which was then known as a notorious entertainment and nightlife precinct. Shophouses on Bugis Street were demolished, laying the foundation for mixed-use development Bugis Junction which opened on Sept 8, 1995. Across the road is Bugis Street, which was reincarnated as a pedestrianised shopping street. Meanwhile, integrated development Suntec City opened its doors nearby in 1997.
From the early 2000s, a slew of new developments started populating the area including office tower Parkview Square, the National Library building, and a new campus for the Singapore Management University in the adjacent Bras Basah area.
Knight Frank’s Tan explains that a major shift for Bugis came in tandem with the expansion of Singapore’s central business district (CBD) over the years. Planning for the Marina Bay area — envisioned to serve as an extension of the CBD — started in the 1970s. Following extensive land reclamation and resettlement works, new commercial developments started sprouting up in the Marina Bay area in the 1990s and 2000s.
As the government continued to redevelop Bugis, it saw the potential for the area to further supplement the CBD. In 2008, URA announced plans for the Ophir-Rochor corridor, which would feature mixed-use developments intended to create a vibrant office cluster that would complement the financial district at Marina Bay and Raffles Place.
From a planning standpoint, Bugis is now one of eight subzones within the Downtown Core planning area. It lies adjacent to the City Hall, Nicoll and Marina Centre subzones. Tan notes that this location — straddling newer business-focused areas such as Marina Centre as well as heritage-rich neighbourhoods such as Kampong Glam and the Civic District — gives Bugis an interesting hybrid setting. “Bugis is right at the intersection of modernity, culture and heritage,” she says.
The opening of the Downtown Line, which included a station in Bugis which is an interchange between the Downtown and East-West Lines, further propelled the area’s function as an extension of the CBD, while also boosting its overall vibrancy.
An artist’s impression of the upcoming Shaw Tower, which will include 435,000 sq ft of Grade A office space and 15,700 sq ft of retail space (Picture: Lendlease)
Premium office spaces
As part of the expansion of the CBD, the government sought to inject more office spaces in the Beach Road-Bugis area. In 2007, a Government Land Sales (GLS) site at Beach Road was awarded to a consortium led by City Developments (CDL) for $1.69 billion, which was developed into the South Beach integrated development. Completed in 2016, it has 510,000 sq ft of office space, a 654-key hotel and 190 luxury residences.
Not long after, the DUO integrated development was completed. Located in the Ophir-Rochor corridor, it comprises 570,000 sq ft of office space, 660 residences, a 342-key hotel, and 56,000 sq ft of retail space. It was developed by M+S, a joint venture between Temasek and Malaysian sovereign wealth fund Khazanah Nasional.
The two developments, which introduced nearly 1.1 million Grade A office spaces in total, attracted major MNC occupiers to the area. This includes French pharmaceutical company Sanofi, which took up some 53,000 sq ft at South Beach, while Mastercard and American medical devices firm Abbot Labs took up 74,000 sq ft and 100,000 sq ft respectively at DUO.
In July 2019, the office and retail components at DUO were sold for $1.58 billion to a 60:40 joint venture between Allianz Real Estate and Hong Kong-based private equity firm Gaw Capital. Later that same year, the hotel component — Andaz Singapore — was sold to Hoi Hup Realty for $475 million.
Knight Frank’s Tan says that despite being located outside the core CBD area, office spaces at South Beach and DUO today can command rents exceeding $10 psf per month, putting it on par with the Raffles Place and Marina Bay area, where rents range from around $9 to $12 psf per month.
One reason for the strong performance, she believes, is the premium standard of the buildings, offering features such as Green Mark Platinum certification, distinctive design and architecture, and a focus on sustainability and greenery.
Another huge factor is connectivity, with South Beach located next to the Esplanade MRT Station on the Circle Line, while DUO is connected to the Bugis MRT Interchange Station, connecting the East-West and the Downtown Lines.
In any case, the developments underpin an overall rising trend in office rents for the Beach Road-Bugis area, which has resumed growing following contractions during the pandemic. Tan says that in 2Q2022, Grade A office rents in the Beach Road and Middle Road area rose 1.1% q-o-q, matching the pace of growth for prime grade office rents in the Raffles Place and Marina Bay area and indicating strong and sustained demand from occupiers.
Construction site for Guoco Midtown, captured on Aug 11 (Picture: Samuel Isaac Chua/The Edge Singapore)
A new wave of projects
The strong office demand in the Beach Road Bugis area bodes well for the next major project in the area — Guoco Midtown. The $2.4 billion mixed-use development at the 99-year leasehold Beach Road site — awarded to a joint venture between GuocoLand and Guoco Group for $1.62 billion in 2017 — will include 770,000 sq ft of Grade A office space, an 80,000 sq ft business and lifestyle hub, and over 30,000 sq ft in retail space to be completed in phases from 4Q2022.
Guoco Midtown features two residential developments — the 219-unit Midtown Bay, as well as the 588-unit Midtown Modern. The latter sits on a GLS site at Tan Quee Lan Street that was awarded in 2019 to GuocoLand for $800.2 million and is slated for completion in 2025. The site, which had previously been allotted for predominantly commercial use, was updated in the 2019 URA Master Plan to reflect residential use with first-storey commercial.
Tan says that in recent years, the government has tweaked the planning for Bugis as it recognised the need for more residential components to balance out existing office and commercial supply. “The government is cognisant of the fact that a business district needs to have day and night vibrancy,” she adds.
In 2019, a GLS site on Middle Road zoned for residential use with first-storey commercial was awarded to Wing Tai Holdings for $492 million. The development, dubbed The M, will comprise three 20-storey towers and a six-storey tower with a total of 522 residential units. It is slated for completion in 2024. (Find Singapore commercial properties with our commercial directory)
For Tan, the boost in residential offerings is also a positive development for Bugis in a post-pandemic environment, where hybrid working is still very much in the mode. “With more residential components being added to the Bugis area, it helps people view it as a viable place to both work and live,” she notes.
Construction site for the 522-unit The M project at Middle Road, captured on Aug 11 (Picture: Samuel Isaac Chua/The Edge Singapore)
Bright outlook for residential properties
Average prices for private residential sales in Bugis have steadily increased over the years as an outcome of the ongoing rejuvenation. Tan notes that the strong performance of residential components at DUO and South Beach paved the way for the current crop of upcoming developments.
Midtown Bay, the residential component at Guoco Midtown that was launched in October 2019, drove up average prices for new private residential sales in District 7, where Bugis is located. To date, 86 of a total of 219 units (39%) at Midtown Bay have been sold at an average price of $2,966 psf. Midtown Modern, which was launched in March last year, saw over 60% of its 558 units sold during its launch weekend at an average price of around $2,800 psf. Since then, the takeup rate has increased to 79%, with units sold at an average price of $2,744 psf. Meanwhile, The M has also seen similarly healthy sales, with 93% of the 522 units sold at an average price of $2,488 psf since its launch in February 2020.
As of 1H2022, Tan notes that the average price for new private residential sales in District 7 stands at just under $2,800 psf, exceeding prices in District 2 which includes the Anson and Tanjong Pagar area. It is a clear indication of a preference for the Bugis area, which Tan believes is anchored by its connectivity, good mix of new residential and commercial developments, and overall vibrancy.
Apart from redevelopment projects such as Golden Mile Complex and Shaw Tower, the Bugis and Beach Road area is expected to further benefit from other ongoing rejuvenation projects (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Other key developments
Apart from redevelopment projects such as Golden Mile Complex and Shaw Tower, Tan expects the Bugis and Beach Road area to further benefit from other ongoing rejuvenation projects.
One of these is the government’s efforts to create an expanded arts and cultural precinct. Spanning the Fort Canning Park, Civic District and the Bras Basah-Bugis areas, the precinct is envisioned to be a pedestrianised area that offers a walkable and immersive experience around Singapore’s key heritage assets in the city centre.
Residential developments in the vicinity will also see diversification through the HDB Build-To-Order (BTO) project near the Jalan Besar MRT Station, not far from the Ophir-Rochor corridor. The project is the first under the Prime Location Public Housing model and will have a total of 960 units upon completion in 2028. Following its launch during the November 2021 BTO exercise, the project saw a subscription rate exceeding seven times, with most applicants vying for the larger four-room units. (Find HDB flats for rent or sale with our Singapore HDB directory)
In the longer-term, the redevelopment of the Kampong Bugis precinct, located at the mouth of Kallang River, is also expected to have a spillover effect that will impact the Bugis and Beach Road area. The government also intends to develop the sprawling 8.2ha white site over the next nine to 11 years, with plans to add 4,000 private homes, and over 50,000 sq ft of retail, offices and community facilities to the waterfront district.
Check out the latest listings near Bugis Junction, Beach Road, Midtown Modern, Guoco Midtown, Golden Mile Complex, Shaw Towers, Bugis MRT Interchange Station, Esplanade MRT Station, Jalan Besar MRT Station
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