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Not a zero-sum game
IN LAND-SCARCE Singapore, property development is a highly competitive, capital intensive business, where developers vie fiercely for the prized X factor that could lift a project in a landscape already replete with skyscrapers.
GuocoLand group managing director Cheng Hsing Yao believes, however, that despite competition real estate development is not a zero-sum game. That is, all parties - stakeholders including buyers and tenants of units and the surrounding community - must benefit. The end result is something more than the sum of its parts.
This stance is a discipline he honed over more than a decade in the public sector between 1997 and 2012. He served in leadership positions at the Urban Redevelopment Authority and the Centre for Livable Cities. He holds a degree in architecture and a Master in Design Studies from Harvard University.
''Public service is macro and longer term. The private sector tends to be more micro, from the ground up and to some extent, shorter term. At the URA, long-term plans are for 50 years, but business cycles are way shorter. Those differences make it look like the objectives are not aligned. But actually the objectives can be similar - which is that everyone ultimately wants good and successful developments, and a vibrant, livable city.
''To me, development is not a zero-sum game. We don't see our neighbours as our competitors, but we see them more as collaborators because when we do something that adds value to everyone, the entire neighbourhood is uplifted in the process. Everyone benefits.''
GuocoLand, which pivoted towards luxury residential development sometime after 2010, is making its mark in mixed-use projects which blend commercial, retail and residential features in a single project. Its flagship development is Guoco Tower, located atop the Tanjong Pagar MRT station. It boasts an office block, six levels of premium retail and F&B space, 181 residential units and a luxury hotel.
THAT'S not all. Guoco Midtown, slated for completion in 2022, is located at the junction of Beach Road and Ophir-Rochor Road. It promises luxury residential units; landscaping and public spaces comprising more than 10 different plazas and gardens; 770,000 sq ft of premium office space and retail amenities. It also now includes Midtown Modern, the group's new 30-storey luxury development at Tan Quee Lan St, atop the Bugis MRT station.
Integrated mixed developments have become a core plank of GuocoLand's business strategy, and to date, that has yielded success. Through the years, assets have reached S$11 billion in 2020.
''We wanted to diversify from pure residential development into one with investment properties. We believe integrated developments are a very relevant concept. The different components of a mixed development can create synergy and value in ways that a simple single-use development cannot.''
There are, to be sure, challenges. ''An integrated development is easily three or four times more complex to design and build. It's a skill set that takes effort and experience to develop.''
One of the key objectives is to create and enhance the community, an intangible value which on the surface may seem unrelated to business. This, however, is part of the group's commitment towards sustainability, which encompasses not just social aspects but also the environment. But more on that in a while.
In addition to the community objectives is the challenge of designing a desirable luxury offering amid Singapore's cityscape. A home in a high density city conjures images of cramped spaces, surely anathema to the wealthy.
For Mr Cheng, the key is livability. ''Livability relates to quality of life, our sense of well-being and ultimately how happy we are,'' he says. To make a development livable, active placemaking is key. Placemaking, as defined by the URA, creates spaces that ''connect people and foster relationships among the community''. This arguably is the elusive X factor.
In GuocoLand's mixed developments, the group strives to enhance and enliven the community. This it did with Guoco Tower for the Tanjong Pagar area, now a bustling hub for office workers and leisure seekers thanks to an attractive mix of eateries set amid greenery. The new Midtown project on Beach Road also features an ''open and porous'' approach. ''We introduced a lot of public spaces, making it easy for people to walk through the development.''
Mr Cheng says the concepts of density and livability are not necessarily at loggerheads. ''Mixed development densities tend to be very high, but you use the different components to create amenities.''
GUOCO Tower's plot ratio, for example, is 10.5, when most residential projects' plot ratios range between 1.6 and 2.8. ''(Guoco Tower's plot ratio) is more than four times higher… but you can actually create spaces that are quite exclusive and not so dense,'' Mr Cheng says.
He believes today's high net worth individuals have moved beyond the traditional mindset that upmarket homes must be freehold and in districts 9, 10 and 11. ''More leasehold properties are actually commanding premium prices, and highly desirable locations are emerging in parts of 12 the Central Business District, such as Tanjong Pagar.
''Very often, people say location, location, location. The more I think about it, the more I find that (way of thinking) is incomplete. At the moment, my three words are - location, lifestyle and community. Location isn't everything. Lifestyle relates to the development concept and the amenities available… Community is interesting. In recent times, we find that high-end buyers give priority to living in a like-minded community. This is because they recognise that the community can eventually become an extension of their social circle.''
Green spaces are clearly a must, and are a prominent feature of GuocoLand mixed use projects. ''Green spaces are a form of luxury. You can be near the MRT, and when you go home you have a big garden to enjoy.''
Another aspect of livability relates to the philosophy behind the group's concepts - that is, design from the ''inside out''.
''We have to design from the user's perspective. While the shape and form of the architecture in terms of a building's external is important, we do not want to let the form dictate the function inside. In an apartment we place a lot of emphasis on the dimensions, the proportion of space and light, and the ventilation,'' Mr Cheng says.
Meanwhile, GuocoLand's commitment to sustainability has stood the group in good stead particularly through the Covid-19 crisis. He adds: ''If we keep our focus on the ideals of sustainability and livability, we will do the right thing. My definition of sustainability is along the triple bottom line concept - it is about environmental sustainability. but it's also economic and social. Economic sustainability means you need to pay attention to how the needs of industries and businesses are changing.''
ON SUSTAINABILITY, GuocoLand projects have clinched several BCA Green Mark Platinum awards. Earlier this year, the group also secured a S$730 million green loan for Midtown Modern, which is expected to meet the criteria for a Green Mark Gold certification by BCA.
Mr Cheng says: ''We design offices in a certain way, because we need to be abreast of the way businesses are changing. And even though our projects are high-end, we put a lot of emphasis on public spaces.
Singapore's luxury residential market, he says, is resilient partly because of how Singapore has responded to Covid-19. ''Buying real estate is actually buying into the country, the governance and state organisations. And it is also a relative thing - people look at how Singapore is doing by measuring us against other cities. So Singapore needs to do well not just on its own terms but also relative to rival cities. The resilience of the property market has a lot to do with how we have managed crises historically and were able to bounce back stronger.
''Covid-19 is a big learning and re-learning for many of us... It is the mother of all disruption. But we cannot tell ourselves that there is nothing we can do. There is always something we can do about it,'' says Mr Cheng.