As part of its growth, Singapore has always worked towards regularly renewing its skyline as it develops, looking to inject vibrant new offerings to keep the country’s appeal as a global destination. The movement to have more mixed-use developments which are more people-centric and have a diversity of uses has been ongoing for years.

At the same time, JLL’s research shows that the city-state will experience a 56 per cent deficit in ESG-focused office stock by 2030, a timeline many corporates have set for meeting their intermediate sustainability goals. The gap in having ESG-focused office stock as Singapore renews its key nodes shows that there is broader, positive value in having incentives for current building owners to make the change.

While rejuvenation efforts can create better vibrancy and appeal, it also provides an opportunity for more ESG-driven developments to come online. This twin benefit will not just help Singapore meet its present needs, but also progress towards its sustainability goals in the longer term.

The CBD Incentive Scheme and the Strategic Development Incentive Scheme are two schemes which have the potential to achieve this. Introduced by the Urban Redevelopment Authority (URA) in 2019 as part of Singapore’s Master Plan 2019, it seeks to encourage the transformation of the Central Business District (CBD) and rejuvenate strategic locations in the Republic.

With the schemes due to expire in November 2024, there are grounds for their extension upon expiry.

Healthy take-up rate

JLL’s research shows that since the announcement of the two schemes in 2019, an estimated 4.7 million square feet (sq ft) of office space islandwide have been earmarked for new leases of life that can add vibrancy to the precincts they are located within.

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Simultaneously, these would also boost the stock of ESG-focused office inventory to cater to the increasing demand by corporates to meet their ESG pledges.

Of these, over 3.3 million sq ft in almost 20 developments have already been withdrawn between 2020 and 2023 to make way for newer developments of more diverse use. This is an unprecedented high in a four-year period. Another 1.4 million sq ft of office space could potentially be withdrawn over the next four years if developers follow through with their redevelopment and refurbishment plans announced between 2020 and 2023.

Offering additional plot ratios of 25 to 30 per cent for transitioning into hotels or mixed-use developments, the CBD Incentive (CBDI) Scheme has been a catalyst for qualifying office building owners in the CBD to reassess strategies for their ageing assets. JLL’s research showed that nearly 60 per cent or 2.7 million sq ft of the earmarked space thus far is taking place in the CBD, of which almost half will be tapping the CBDI Scheme.

Revamped, sustainable office stock

The islandwide office withdrawal of 4.7 million sq ft is set to yield about 2,200 residential units and 2,000 hotel rooms or serviced apartment units. This is in addition to returning some six million sq ft of new and ESG-focused office spaces to the market.

The CBD itself will see the injection of over 660 residential units and about 1,270 hotel rooms or serviced apartment units. Over three million sq ft of brand new and ESG-focused office spaces will replace the obsolete stock.

Owners of office buildings such as Fuji Xerox Towers, AXA Tower and Shenton House are tapping the CBDI Scheme to redevelop their ageing assets into developments with more diverse uses. Notably, the redevelopment of AXA Tower, approved with a building height of 305 m, is set to redefine Singapore’s skyline. Upon its expected completion in 2028, this mixed-use development will feature a blend of retail spaces, offices, a hotel and luxury residential units. It is poised to become Singapore’s tallest skyscraper.

The competition to provide newer and greener offices to stay relevant has also spurred landlords in non-qualifying buildings to pursue redevelopment strategies for their assets. These include Shaw Tower and Clifford Centre, which are located outside the designated boundaries of the CBDI Scheme.

The new Shaw Tower, due for completion in 2025, is set to become one of Singapore’s most sustainable and healthy workplaces. Besides obtaining the BCA Green Mark Platinum (Super Low Energy) certification, it is reportedly also the first building under development in Singapore to achieve the WiredScore Platinum award. It is the highest rating available in recognition of its digital connectivity standards as a future-ready workplace.

Additionally, it is reportedly the country’s first high-rise Grade A commercial building under development to be pre-certified under WELL v2 Core by the International Well Building Institute for its focus on well-being and health.

Impetus along Orchard Road

Similarly in Orchard, the Strategic Development Incentive (SDI) Scheme has acted as a catalyst for the rejuvenation of Singapore’s shopping belt.

The SDI Scheme offers owners of qualifying developments various incentives. These include an increase in plot ratio when they collaborate with at least one neighbouring property to transform their assets into new, bold and innovative developments that will positively transform the surrounding urban environment and help rejuvenate the neighbourhood.

The SDI Scheme has triggered a redevelopment fever in Orchard Road. Hotel Properties Ltd has obtained the URA’s provisional permission to redevelop Forum The Shopping Mall, voco Orchard Singapore and HPL House into a new mixed-use development under the scheme. The owner of Faber House has also tapped the scheme for redevelopment.

The redevelopment drive has sparked a collective sales wave and set new benchmark land prices in the Orchard sub-market. A new record unit land price of over S$3,350 per square foot per plot ratio (psf ppr) was set when Far East Shopping Centre was sold to Bright Ruby Resources in September 2023.

This surpassed the previous record set in December 2022, when Ming Arcade was sold for S$3,125 psf ppr. Prior to that, Tanglin Shopping Centre was acquired for S$2,769 psf ppr in February 2022. All three assets have been acquired for redevelopment purposes.

Renewing the schemes

With the effects seen from the CBDI and SDI schemes, both are key enablers for the stock renewal of office spaces, concurrently boosting the stock of green offices in land-scarce Singapore. With time lost due to the pandemic, continuing the two schemes will help generate further momentum.

It is imperative that the URA extend these schemes beyond their initial five-year tenure in order to catalyse the stock renewal of even more ageing assets to ensure Singapore can support corporates in the ESG ambition.

Tay Huey Ying is head of research and consultancy, and Michelle Tee is director, research and consultancy, JLL Singapore