Why integrated developments command a price premium

By EdgeProp Singapore
/ EdgeProp Singapore |
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SINGAPORE (EDGEPROP) - More people are willing to pay a premium for mixed-use developments integrated with an MRT station. What is the appeal of integrated developments? According to Alice Tan, head of consultancy at Knight Frank Singapore, an integrated development is a mixed-use development with a residential component and significant commercial component, seamlessly connected to a transport node and public spaces.
“Generally, when integrated developments are launched, developers will build a 20% to 25% premium over other private condos in the same area,” says Tan, who was speaking at the EdgeProp Singapore NDP Master Plan Master Class webinar series on Aug 13, which featured the Beach Road-Bugis area and the Lentor area.
Two 1,808 sq ft four-bedroom units with a combined area of 3,616 sq ft on the 29th and 30th floors of Midtown Modern was sold for $17 million in July 2022. The highest psf price achieved was for the 1,808 sq ft unit on the 30th floor - at $4,783 psf last month (Picture: GuocoLand)

New luxury offerings

In the Beach Road-Bugis area, two four-bedroom units on the 29th and 30th floors of Midtown Modern set new psf price highs of $4,617 psf and $4,783 psf respectively when they were sold in July, based on caveats lodged. The two units of 1,808 sq ft each can be amalgamated into a duplex, five-bedroom penthouse of 3,616 sq ft. The 29th-floor unit fetched $8.35 million, while the 30th-floor unit was sold for $8.65 million, bringing the total to $17 million.
The duplex penthouse is part of six such units at Midtown Modern launched in early July under the Sky Bungalow Collection by GuocoLand. Prior to this, the sole penthouse, a 3,520 sq ft, five-bedroom simplex, was snapped up at launch for $14.83 million ($4,213 psf) a year ago.
Midtown Modern is linked underground to the Bugis MRT Station, an interchange for the Downtown and East-West Lines. The 558-unit Midtown Modern is an extension of the Guoco Midtown integrated development located across Beach Road. The $2.4 billion Guoco Midtown has a 30-storey Grade-A office tower; a five-storey Midtown Hub for social and business networking; 33,000 sq ft retail and F&B space; as well as the 219-unit Midtown Bay, with Soho-style apartments. The development also boasts over 30 themed gardens and landscaped areas totalling 3.8ha. Midtown Modern is developed by GuocoLand in a joint venture with Hong Leong Holdings and Hong Realty.
The development of Guoco Midtown has also spurred renewal in the neighbourhood. Shaw Tower, a former mixed-use commercial building with office and cinemas, built in 1975, has been torn down in 2020. Construction is underway for a new 450,000 sq ft, Grade-A office tower with five storeys (15,700 sq ft) of retail and F&B. (Find Singapore commercial properties with our commercial directory)
Construction of the upcoming 558-unit Midtown Moder at Tan Quee Lan Street in the Beach Road-Bugis neighbourhood (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Renewal, new psf price highs

Located on Middle Road, directly opposite Shaw Tower is the upcoming 522-unit The M, by Wing Tai Holdings. The project is 93% sold following its launch in February 2020. The highest psf price achieved in the development is for a 614 sq ft, two-bedroom unit on the 19th floor that was sold for $1.862 million ($3,035 psf), according to a caveat lodged in September 2021.
Developer UOL Group is building a new seven-storey building at 333 North Bridge Road that it purchased in December 2019 for $79.3 million. It will serve as an extension of UOL’s Odeon Towers. The building is located opposite Raffles Hotel, which re-opened in late 2019 after a two-year renovation.
On the other side of Shaw Tower is South Beach, an integrated development completed in 2016. It has two towers of 42 and 45 storeys — one with Grade-A office space; and the other with the 634-room JW Marriott Hotel on the first 22 storeys, and 190 luxury apartments, South Beach Residences, spanning the 23rd to 45th storeys. The development comes with retail and F&B on the first and basement level, which is linked to the Esplanade MRT Station on the Circle Line.
South Beach Residences was launched in 2018 at prices starting from $3.5 million, or $2,795 psf, for a 1,216 sq ft, two-bedroom unit. Prices hit a high of $4,748 psf in October 2021, when a 3,897 sq ft, three-bedroom penthouse on the 42nd floor fetched $18.5 million.
Another significant integrated development in the Beach Road area is Duo by M+S, a joint venture between Singapore’s Temasek Holdings and Malaysia’s Khazanah Nasional, the respective countries’ sovereign wealth funds. Completed in 2017, the 39-storey Duo Tower has 568,412 sq ft of Grade-A office space, with the top 15 floors occupied by the 342-room Andaz Hotel. The 49-storey residential tower, Duo Residences, has 660 units, and is fully sold to date.
Launched in November 2013, units in the 99-year leasehold Duo Residences were sold at an average price of $1,969 psf. Units sold in 2021-2022 to date have achieved prices averaging $2,110 psf, based on caveats lodged.
GuocoLand is developing the 186,001 sq ft, 99-year leasehold site into the 605-unit Lentor Modern in the new Lentor Hills Estate, which is targeted for launch in September (Photo: Samuel Isaac Chua/EdgeProp Singapore)

New suburban enclave

The Beach Road-Bugis area has seen new integrated developments setting new price benchmarks for residences with each successive new launch. Are we likely to see the same kind of price uplift in a suburban enclave like Lentor Hills Estate, located off Yio Chu Kang Road?
According to a recent consumer survey by EdgeProp Singapore, 79% of 1,247 people surveyed opted for a non-Central location with high connectivity (for example, direct access to an MRT station) over a Central location with low connectivity (not within walking distance of an MRT station).
Likewise, 81% of those surveyed preferred a non-Central location, situated on top of a mall over a Central location that is not within walking distance of a mall. Hence, people value convenience and connectivity above having a Central or non-Central residential address.
Would GuocoLand be able to replicate its success with Guoco Midtown and Midtown Modern at the up-and-coming Lentor Hills estate? GuocoLand had won the tender for the Government Land Sale (GLS) site at Lentor Central in July 2021 with a bid of $784.1 million or $1,204 psf per plot ratio (psf ppr).
The developer is developing the 186,001 sq ft, 99-year leasehold site into the 605-unit Lentor Modern, which is targeted for launch in September. The residences will be spread across three 25-storey towers, and sit on top of a 96,000 sq ft retail complex, with a 12,000 sq ft supermarket, 10,000 sq ft childcare centre, as well as services, F&B outlets and other amenities. The development will be integrated with the upcoming Lentor MRT Station on the Thomson-East Coast Line.
The site at Lentor Central is located in the Thomson and Yio Chu Kang area, which is a private housing estate with predominantly landed homes. It is also near nature parks and nature reserves, namely the Thomson Nature Park and Lower Peirce Reservoir Park.
Lentor Modern will be the only integrated development there, and its launch is likely to set a new benchmark for the new neighbourhoodm and will be linked directly to the Lentor MRT station (Photo: Albert Chua/EdgeProp Singapore)

‘Only integrated development in Lentor’

Meanwhile, the neighbouring Lentor Hills Road (Parcel A), a 144,744 sq ft, 99-year leasehold site, was sold for $586.6 million ($1,060 psf ppr) to the top bidder, a consortium made up of Hong Leong Holdings, GuocoLand and TID (a joint venture between Hong Leong Holdings and Mitsui Fudosan), in January 2022. The site is expected to be developed into a 600-unit residential development, called Lentor Hills Residences.
In May this year, the government released three more GLS sites earmarked for residential development in the Lentor area: A land parcel at Lentor Central, Lentor Gardens and Lentor Hills Road (Parcel B) are offered under the 1H2022 GLS programme. Collectively, the three GLS sites could yield about 1,265 residential units, according to URA.
While the sites at Lentor Central and Lentor Hills Road (Parcel B) have been launched for sale by public tender on the Confirmed List, the Lentor Gardens land parcel is on the Reserve List, which means it will be triggered for sale only if a developer submits a bid that meets an acceptable minimum bid to URA.
It looks like Lentor Modern will be the only integrated development there, and its launch is likely to set a new benchmark for the new neighbourhood.
Other condominium projects in the vicinity are the 421-unit The Calrose on Yio Chu Kang Road and 362-unit Far Horizon Gardens at Ang Mo Kio Avenue 9. The Calrose, a freehold, five-storey development, was launched in May 2005, and completed in 2007. Meanwhile, Far Horizon Gardens was completed in 1986. Hence, the last new project launch in the area was The Calrose, 17 years ago. Resale transactions at The Calrose in 2022 ranged from $1.452 million ($1,569 psf) for a 926 sq ft unit, to $2.768 million ($1,292 psf) for a 2,142 sq ft, penthouse unit.
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Meanwhile, Far Horizon Gardens, which has a 99-year lease from 1982, has seen units change hands this year at prices ranging from $1.165 million ($902 psf) for a 1,292 sq ft unit to $1.125 million ($977 psf) for a 1,152 sq ft unit, according to caveats lodged in July.
See our stories on the Bugis-Beach Road and Lentor planning areas.

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