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Regional centres take centre stage
THE Singapore government first mooted the idea of decentralisation with smaller employment centres outside the Central Area in its first concept plan in 1971.
This took further shape with the 1991 Concept Plan, where a constellation of fringe, sub-regional and regional centres extending out from the central region was envisioned.
The topic of decentralised commercial centres again took centre stage during the Covid-19 pandemic, as companies nationwide were compelled to split operations in a hub-and-spoke model to implement some form of safe distancing.
Even before these contingency plans accelerated the distribution of employees into non-traditional central business district (CBD) locations, residential homes in regional centres such as Jurong East, as well as sub-regional centres Paya Lebar and Buona Vista, were already garnering interest with increased investment potential as jobs moved closer to housing areas.
In this light, the private residential market in these three areas will be examined to track the development of such homes alongside decentralised nodes of employment.
PAYA LEBAR SUB-REGIONAL CENTRE
Located at the fringe of the Central Region, the Paya Lebar area has, as part of decentralisation plans, progressively transformed into a sub-regional centre that is closest in proximity to the CBD.
Rejuvenation of the area prompted developers to launch a stable stream of condominium projects. Over the years, average new sale unit prices in the Geylang Planning Area (in which Paya Lebar is located) have risen by some 18.6 per cent from 2015 to Q3 2020 (excluding executive condominiums), with new projects pushing up prices (based on data available as at Oct 23, 2020).
From 2015 to 2016, quarterly sales for homes hovered at an average of 168 units. The 1,042-unit Sims Urban Oasis, a new launch then, accounted for most of the sales activity. The subsequent launch of the 429-unit Park Place Residences in the mixed-used Paya Lebar Quarter (PLQ) led to a spike in new sale volumes and prices in Q1 2017. With the narrative of PLQ as a catalyst to the reinvention of Paya Lebar as a sub-regional business hub, the project sold a total of 202 units averaging S$1,805 per square foot (psf) in Q1 2017. This was followed by 185 units averaging S$2,025 psf in Q2 2018.
Prices have generally trended upwards since. Despite Singapore being in a pandemic-induced recession, total sales in the planning area crossed the one-thousand mark, with some 1,157 sales recorded in the first three quarters of 2020.
Not only did sales volume hold steady, it also surpassed the 758 units transacted in the same period in 2019, buttressed by private homes sales in Q3 2020 which hit a five-year record high following the reopening of showflats on 19 June 2020.
In Q3 2020, a total of 698 transactions was recorded. This crossed the peak in Q4 2018 (when the 1,399-unit Parc Esta was launched) with newly-launched projects Noma and Penrose seeing strong interest and moving a collective total of 424 units.
BUONA VISTA SUB-REGIONAL CENTRE
The land for the redevelopment of one-north was earmarked as a science park as early as the 1991 Concept Plan, and forms part of the initiative to develop Buona Vista into a sub-regional centre as a sub-zone within the Queenstown Planning Area.
one-north was to become the location for industrial research and innovation for a knowledge-based economy in Singapore, and has since also been integrated with residential communities and entertainment options, extending into Holland Village to achieve the proposed "work-live-play-learn" concept.
Sales volume for homes in the Queenstown Planning Area was relatively moderate from 2015 to Q3 2016, and chiefly dominated by resale transactions.
Nevertheless, the launch of Queens Peak in Q4 2016 piqued buyers' interest - 272 units in the project transacted during the launch quarter. Sales volume gained further traction, with launches such as Margaret Ville, The Verandah Residences, The Harbour View Gardens and Stirling Residences driving sales in 2018.
Overall average unit prices grew by some 29.5 per cent from Q1 2015 to Q3 2020 in Queenstown, the strongest among the three commercial nodes.
More recently, developers have marketed more upscale homes in the area, with unit prices reaching S$2,088 psf in Q4 2019. The launch of One Holland Village Residences set the price benchmark for the area.
Situated within five-minutes' drive from the one-north business hub, the residence proved to be popular, with more than one-third of the project sold in the Q4 2019 at an average unit price of S$2,684 psf. This was inclusive of two recorded transactions going for more than S$10 million.
JURONG EAST REGIONAL CENTRE
Conceptualised as Singapore's second CBD in the Urban Redevelopment Authority's 2008 Master Plan, the 306-hectare Jurong Lake District (JLD) comprises the Jurong Gateway and Lakeside precinct.
Estimated to be twice the size of the Tampines Regional Centre, Jurong Gateway functions as a commercial hub in western Singapore, and is complemented by the development of Lakeside into a unique leisure destination around Jurong Lake.
The secondary market accounted for virtually all transactions due to a lack of new launches in the past five years. Housing stock in the region has remained at 3,218 since J Gateway obtained its temporary occupation permit (TOP) in Q4 2016.
With not many existing private residential projects in the area, there is potential for developers to tap into this hotspot and capitalise on the growth story of JLD.
Despite the lack of new residential projects, developments such as J Gateway have shown evidence of price appreciation. Of the 50 secondary transactions analysed in the project, 49 units have been sold for a profit, including six units that were sold with more than 20 per cent gain after being held between four to six years.
BIRTH OF A NASCENT CBD
While some of the decentralised commercial nodes have performed better than others, each has its own intrinsic character and the residential scene in these areas have evolved to grow distinctively alongside their commercial employment centre cousins.
Prospects for new residential development and existing homes remain positive in the long term, in the locations surrounding such decentralised sub-regional and regional centres.
And the story of growth is far from finished.
In Paya Lebar, the freeing up of some 800 hectares of land from Paya Lebar airbase post-2030 will drive the development of homes, office, factories and recreational areas with liberated height restrictions.
In Jurong East, the marriage of the future Tuas Megaport with the established industrial infrastructure as well as the emerging Jurong Innovation District manufacturing hub would increasingly lead to a synergy, that would see the birth of a nascent CBD outside the downtown core.
- Leonard Tay is head, research and Khoo Zi Ting is analyst, research at Knight Frank Singapore.