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Conditions for 2nd Woodlands Square commercial site unveiled
A NUMBER of conditions were unveiled on Tuesday for the development of a second commercial site in Woodlands Square, which is open for application under the Reserve List of the government land sales (GLS) programme.
Two industrial sites on the Confirmed List - one each in Ubi and Tampines - were launched, while a Reserve List site in Tuas Bay Close is open for application under the first-half 2015 industrial GLS (iGLS).
The Urban Redevelopment Authority (URA) has stipulated that the Woodlands commercial site would be mainly for offices, with at least 47,009 square metres or 60 per cent of the maximum gross floor area (GFA) to be dedicated to office use. Up to 8,000 sq m or 10.2 per cent can be set aside for retail and F&B uses, a minimum of 1,000 sq m for a childcare centre, and no more than 23,504 sq m for serviced apartments or residential use.
Sites on the Reserve List are triggered for sale if there is sufficient market interest and a minimum acceptable bid is received.
Some consultants have expressed reservations that the Woodlands site would be triggered for sale soon.
CBRE research head for South- east Asia Desmond Sim, for example, said that although the decentralisation story is continuing to unfold in the office-space sector, Jurong "currently still takes centre stage, with initial indicators illustrating its success as a regional centre". "This euphoria of successful decentralisation may be replicated in Woodlands; however, soft market conditions may impair competitive bids should it be triggered for tender."
SLP International executive director Nicholas Mak also doesn't expect the Woodlands Square site to be triggered for sale in the next 6-12 months, citing the substantial 5.5 million sq ft of office space to be completed next year and the steady supply of some 1.65 million sq ft to be completed each year from 2017 to 2019.
"Furthermore, the TDSR (total debt servicing ratio) framework has also dampened the demand from retail investors for strata-titled commercial space," he said.
The first commercial site in Woodlands Square was bought by a consortium led by Far East Organization at S$634 million or S$906 per square foot per plot ratio (psf ppr) in April 2014.
Known as Wood Square, the project will have two 16-storey office towers and a retail component, said Far East's website; the office towers will house small and large strata offices for sale and lease, making up 90 per cent of the development.
Consultants note that developers interested in the second commercial site in the area will pay close attention to the take-up of Wood Square. The second site is slightly larger and could yield 20.5 per cent more space, noted Mr Mak. He expects the land parcel to fetch between S$710 million and S$735 million if it is launched for sale by tender today, with interest likely to come from major developers and those linked to Reits.
Christine Li, director of research at Cushman & Wakefield, expects the price tag for the second site in Woodlands Square to range from S$880 psf ppr to S$930 psf ppr, with six to 10 participants. "Woodlands is still a relatively new regional centre, where demand for offices is still untested, unless significant job creation takes place in the north and north-east over the next five years."
But URA reiterated in its release on Tuesday that it plans to transform Woodlands Regional Centre into "a vibrant live-work-play precinct that serves as a key commercial cluster in the North Region".
"When fully developed over the next 10 to 15 years, Woodlands Regional Centre will have about 700,000 sq m of commercial space and offer approximately 100,000 new jobs."
Meanwhile, of the two industrial sites, the 0.6-ha one in Ubi Avenue 1, launched by HDB, could pull in eight to 12 bids with the top bid at S$100-120 psf ppr. The 0.47-ha site in Tampines Industrial Drive (Plot 6), launched by JTC, could draw two to five bids, with the top bid at S$63-80 psf ppr.
Mr Mak said that the Ubi site was likely to garner more interest, as vacant industrial sites for sale in Ubi are rare; additionally, this one is only about 200m from MacPherson MRT station. (In March 2013, a site in Ubi went for a bullish S$172 psf ppr.)
Ms Li said that the other key attribute of the Ubi site is its 30-year tenure, as no site on the Confirmed List under H2 2015 iGLS has a lease of more than 20 years. However, the ban on strata sub-division of the project in the first 10 years after the project's completion could dampen the site's attractiveness as investment demand will be limited, she added.