Paya Lebar Quarter — catalyst for future commercial hub

/ The Edge Property |
Join our  Telegram  channel and follow our  Facebook  for the latest update.
Construction on a massive 3.9ha site fronting the Paya Lebar MRT interchange station began in January. When completed in phases from 2H2018 to 1H2019, Paya Lebar Quarter will comprise a retail complex with 200 shops, three Grade-A office towers with a total of about one million sq ft and three residential towers with 429 units.
Developed by Australian property group Lendlease and Abu Dhabi Investment Authority in a 30:70 joint venture, Paya Lebar Quarter is a mixed-use scheme valued at $3.2 billion when completed. Lendlease purchased the 99- year leasehold site in a government land tender with a bid of $1.67 billion, which translated to $943 psf per plot ratio (psf ppr) in April 2015. Consultants had considered it a bullish bid.
However, Lendlease is confident in its project. “The great differentiator is that we are investing in placemaking,” says Richard Paine, managing director of Paya Lebar Quarter. The integrated development will have a wellness theme with 100,000 sq ft of green public spaces (the size of 20 basketball courts) and a 20,000 sq ft covered event space outside the mall. There will also be a 6m-wide cycling trail and pedestrian pathway within the development that will link to the Sims Avenue park connector. For the convenience of office tenants, there will be facilities for storing bicycles and scooters, as well as showering facilities. The development is aiming for a BCA Green Mark Platinum Award, the highest accolade for sustainability in Singapore.
Paya Lebar Quarter will serve a working population of about 22,000 in the local catchment area within a seven-minute walk and more than one million residents in the area. There has been a buzz in the Paya Lebar Central neighbourhood around the MRT station since the government announced in the URA 2008 Master Plan that it would be transformed into a commercial hub. At the same time, Jurong East — now known as Jurong Gateway — will be Singapore’s second CBD. This is all part of the government’s overall plan towards decentralisation.
Paya Lebar Quarter will have three office towers, three residential towers and a retail complex, and will be adjacent to the Paya Lebar MRT interchange station
Ongoing construction at the 3.9ha site of Paya Lebar Quarter
Makeover of Paya Lebar Central
On the other side of the Paya Lebar MRT track, Singapore Post Centre is also undergoing construction to redevelop the four-storey mall into a revolutionary concept combining bricks-and-mortar and online shopping. Last October, Singapore Post announced that it was spending $150 million to revamp the mall, which is scheduled to open in mid-2017. It will inject 25,000 sq m (about 269,100 sq ft) of retail space in the area.
Adjacent to SingPost Centre is Paya Lebar Square, developed jointly by Low Keng Huat, Guthrie GTS and Sun Venture Group. Completed in November 2014, the mixed-use development has a 10-storey office complex sitting on top of a three-storey, 95,000 sq ft retail mall. The offices were launched for sale on a strata-title basis in 2012 at an average price of $1,750 psf. In resales, units of 484 sq ft have changed hands at prices ranging from $1,652 psf for a low-floor unit to $1,920 psf for a top-floor unit, according to caveats lodged with URA Realis in August and September. Paya Lebar Square sits on a 99-year leasehold site, and was the first commercial site in the new Paya Lebar Central precinct that URA launched for sale in January 2011. The consortium comprising Low Keng Huat, Guthrie GTS and Sun Venture Group beat 10 others to win the site with a bid of $586 million ($872 psf ppr) five years ago.
Another mixed-use development in the vicinity of Paya Lebar Central is Katong Regency, which has 244 condominium units sitting on top of One KM mall. Katong Regency and One KM mall is a redevelopment of the former Lion City Hotel and the adjacent Hollywood Theatre, which UOL Group purchased in January 2011 for $313 million.
When the freehold Katong Regency was launched in 2012, all the units were snapped up within the first week at an average price of $1,600 psf. Some one-bedroom units of 570 sq ft and 581 sq ft on the high floors achieved $2,009 psf in 2012. Katong Regency was completed last year. Recent transactions have seen units change hands at $1,191 psf for an 840 sq ft one-bedroom unit on the 15th floor; and $1.570 psf for a 1,389 sq ft three-bedroom unit on the 13th floor, according to caveats lodged with URA Realis in September and June respectively. One KM, which opened in December 2014, is a 210,000 sq ft mall with about 150 shops.
There are pockets of change happening elsewhere in the neighbourhood. Even Eunos Industrial Estate, adjacent to SingPost Centre, has already been earmarked for transformation. Some of the 1,089 factory units completed by HDB in 1981 are being vacated in batches. These old factories used to be zoned for light industrial use and housed car workshops, lighting fixtures and steel cabinet manufacturers many of which have been relocated over the past decade. Since the government’s plan for transforming Paya Lebar Central was announced, the area has been zoned for non-industrial use. Some of the vacated factories have been demolished to make way for public housing flats in Eunos, and these were completed a decade ago.
Paine: The great differentiator is that [Lendlease is investing in placemaking
‘Third catalyst’
“Paya Lebar Quarter will be the third catalyst in the area,” says Paine. It is likely to have the most far-reaching impact in terms of rejuvenating the Paya Lebar Central neighbourhood, he adds.
The project is designed such that it will be just a 30-second walk from the MRT station to the lobby of the two office towers located just outside the MRT station. The office buildings will be 14 storeys tall and have floor plates ranging from 25,000 to 30,000 sq ft. The third office building will be 13 storeys high and adjacent to the three residential towers.
The six-storey retail complex will be a standalone building and linked to the MRT station and office towers via the covered public event space. The retail mall will have 340,000 sq ft of retail space, or 200 shops. About 30% of the space is dedicated to F&B. Three anchor tenants have signed up for space in the mall: FairPrice Finest supermarket, a Kopi Tiam-managed food court and a nine-screen cinema. Paine says there will also be al fresco bars, cafés, restaurants, entertainment and amenities such as dry cleaners, a supermarket, hair salons and beauty spas.
“People have the option to hold meetings either in their offices or at one of the many F&B outlets,” says Paine. “It will also be a convenience for residents who want to meet with friends.”
There have been concerns about the weak retail leasing market, perpetuated by the falling rents in Orchard Road and the suburban areas in 3Q2016. Average rents in Orchard Road contracted for the seventh quarter, with prime rents for 3Q2016 at $32.35 psf per month, according to CBRE Market View, marking a drop of 0.5% q-o-q and 3.6% y-o-y. Meanwhile, suburban rents fell for four straight quarters, with prime rents in 3Q2016 at $29.40 psf per month, a slight dip of 0.2% q-o-q and 3% y-o-y.
The assets that performed best, however, were those that are well located and near transport links, says Paine. “Even in a challenging market, such retail assets should perform well.”
Artist’s impression of the six-storey mall, which will have about 200 shops, a FairPrice Finest supermarket, food court and cinema
Artist’s impression of the 20,000 sq ft public event space outside the mall at Paya Lebar Quarter

Source: Lendlease

Park Place — residences
The residential component at Paya Lebar Quarter will be called Park Place and will contain 429 units. The residences will be launched for sale only in 1H2017. Unlike many of the mixed-use developments with residential towers sitting on top of the retail complex, the three residential towers at Paya Lebar Quarter will be standalone towers atop a multi-storey carpark. They will be linked to the retail and office buildings via covered walkways and overhead bridges.
Residents of Park Place will have their own private entertainment deck with a 50m swimming pool, a gym, playground and clubhouse. Park Place will be Lendlease’s first residential development in Singapore. The apartments will be a mix of one- to three-bedroom units.
According to Paine, the emphasis for the residential component will be to maximise usable space and efficiency. “We make sure that the units are functional — regular instead of odd-shaped, no strange walls nor a helper’s room that is too small — and all the units are fully fitted,” he adds.
Lendlease’s other project in Singapore that was also a catalyst in a decentralised location is Jem, a mixed-use retail and office development linked to the Jurong East MRT interchange station and the bus interchange station. At Jem, the six-storey retail complex has 241 stores and 818,000 sq ft of retail space. The office tower was fully leased to the Ministry of National Development, the Agri-Food & Veterinary Authority, and the Building and Construction Authority of Singapore on a 30-year leaseback in 2012.
The other project that Lendlease developed is 313@Somerset, a shopping mall linked underground to the Somerset MRT station on Orchard Road, which opened in December 2009.
Lendlease acquired Parkway Parade Shopping Centre at Marine Parade in the east 15 years ago. Over the years, the asset has been transformed, and even though it is the oldest shopping centre in the east, it continues to be one of the most successful in the area. Another mixed-use scheme that Lendlease has transformed — this time in a joint venture in 2006 — is the former Paradiz Centre. It was refurbished and rebranded PoMO Centre. In 2011, the building was sold for $336 million to a joint venture between BS Capital and Enviro- Hub Holdings.
Lendlease, which was founded in 1958, has been in Singapore for 43 years, says Tony Lombardo, the group’s CEO for Asia.
The Australian group has been behind some large-scale urban regeneration projects in major cities worldwide, including Barangaroo South, Darling Square and Victoria Harbour in Australia; Elephant Park in Elephant & Castle and the International Quarter London; as well as Riverline in Chicago. Paya Lebar Quarter will soon be added to that list.
Attraction of decentralised office space
Lendlease has engaged CBRE and JLL to handle the leasing of the office towers at Paya Lebar Quarter. Moray Armstrong, CBRE’s managing director of advisory and transaction services, says: “We have seen a wide array of occupiers attracted to prime office micromarkets outside of the traditional CBD.” Examples of this trend are successful Grade-A office developments such as The Metropolis at Buona Vista in one-north, and the office towers in the Harbourfront precinct. Armstrong adds, “This is in part due to the quality of new developments that have come online, but is also bolstered by improved transportation links and expansion of supporting amenities, for example, retail, F&B and fitness facilities in the vicinity of offices.”
Office occupiers attracted to these decentralised areas include those in energy, insurance, TMT (technology, media and telecommunications), pharmaceutical as well as support functions of financial services. “We anticipate that Paya Lebar Quarter will attract a similar range of tenants, not least given the excellent connectivity on a key MRT interchange and the proximity to the CBD,” says Armstrong.
Those who would consider relocating to Paya Lebar Quarter include MNCs currently in older buildings in the CBD, such as Tanjong Pagar, Shenton Way or Marina Centre, says Chris Archibold, JLL’s head of markets. There are also some tenants in the CBD fringe or in business parks who want to move to a Grade-A office space, he adds.
In recent years, most of the office tenant movement has been driven by efficiency, adds Archibold. “The trend has been there, although it was masked by some of the expansionary moves.”
Office rents for Grade-A office space outside the CBD — for instance, at Paya Lebar Quarter — are likely to be at a discount to the Downtown area. “It may also be viewed as a long-term hedge against being exposed to the wide fluctuations that may occur in the Grade-A office [market],” says CBRE’s Armstrong.
There are only a handful of towers with Grade-A office space in the decentralised areas, though, observes Archibold. “Paya Lebar Quarter is located next to the MRT station and, more importantly, it’s a mixed-use development: You have the retail mall and all the amenities there. I think it will do extremely well.”
This article appeared in The Edge Property Pullout, Issue 751 (Oct 24, 2016) of The Edge Singapore.

Follow Us
Follow our channels to receive property news updates 24/7 round the clock.
EdgeProp Telegram
EdgeProp Facebook
Subscribe to our newsletter

Our Site (previously known as The Edge Property Singapore) is the best property portal for real estate agents, investors, home-seekers and sellers alike in Singapore. On EdgeProp, you will be able to find the latest and hottest property news, property listings, and access tools for your research and analysis.

Whether you are looking to buy, sell or rent apartments, condominiums, executive condos, HDBs, landed houses, commercial properties or industrial properties, we bring you Singapore’s most comprehensive and up-to-date property news and thousands of listings to facilitate your property decisions. Click into any listing to check out the new AI Redesign tool to envision your property based on your preferred style, be it Scandinavian, Minimalist or many others.

View More