Breaking Jurong Lake District into smaller sites could make it more palatable to developers

THE failure of the tender for a 6.5 hectare (ha) white site in Jurong Lake District (JLD) to be awarded is a loss – not just for developers, but also for Singapore.

The white site was launched for sale in June 2023 as a master developer site by the Urban Redevelopment Authority (URA). When the tender closed on Mar 26, one consortium submitted two concept proposals.

Last Friday (Sep 13), the URA said while one proposal was shortlisted, the tender for the site was not awarded as the tendered price, which works out to about S$640 per square foot per plot ratio (psf ppr), was deemed to be too low.

The land cost for the site – with maximum gross floor area of over 3.9 million square feet (sq ft) – works out to about S$2.5 billion.

The site will be placed on the reserve list, where interested tenderers can activate the launch of the site under the concept and price revenue tender approach, subject to a minimum price that is acceptable to the government.

No winners 

The failed bid is a blow to the consortium of CapitaLand Development, City Developments Limited , Frasers Property , Mitsubishi Estate and Mitsui Fudosan (Asia). The partners would have invested much resources into evaluating the project, drawing up concept proposals and working out how to cooperate among themselves.

Also, the chance to generate significant profit and create an outstanding development is lost. 

Might the consortium regret not submitting a higher bid which may have secured the site? Maybe the consortium put too much buffer for what is a relatively high-risk project or was too optimistic in its profit projection.

The government loses from this exercise too.

The development of the site would have taken 10 to 15 years. When completed, it would have housed at least 1.5 million sq ft of office space, up to 1,700 homes, and close to 800,000 sq ft of space for other uses such as retail and food and beverage.

The economic and other benefits from this will now not be reaped.

Most crucially, the no-go on the JLD white site is a blow to URA’s decentralisation strategy.

JLD is planned to be progressively developed into Singapore’s largest business district outside the city centre to cater to varied business needs. It is also envisioned as a model sustainability district with a goal to achieve net-zero emissions for new developments around 2045. 

Importance of a second CBD

Sure, demand for office space faces long-term challenges. Remote working could make further inroads as technology advances. Businesses might become more inward looking and go slow on having a large regional presence here. 

Moreover, businesses located in JLD may struggle to attract talent from all parts of Singapore. Would residents living in the east resist travelling to Jurong?

Nonetheless, there are compelling reasons to develop JLD as the second Central Business District (CBD).

Long-term office space demand will be underpinned by the continued need for people to come together to build bonds and co-create.

Positive growth prospects for South-east Asia, Singapore’s ability to add value to businesses from diverse nationalities and sectors, as well as the high quality of life here, bode well for the Republic as a base for businesses.

JLD will be well served by public transport. It is near major institutes of higher learning, research facilities and Tuas Port. And place-making efforts can make JLD highly attractive to office workers.

Indeed, there should be urgency in building JLD as a second CBD. Some businesses operating out of the existing CBD may want to also be in JLD to spread their risks. Other businesses may like to have the option of moving from the CBD to JLD, where they can possibly secure high-quality office spaces at much lower rents. 

Furthermore, new businesses that grow on the back of the green transition might seek to locate at highly sustainable new developments in JLD.

Ditch the master developer model

If the shortlisted proposal for the JLD white site is outstanding, would the benefits of awarding the site outweigh the costs of selling the site at a “low” price? Maybe, the URA could have asked the consortium to raise its bid price.

Placing the JLD white site on the reserve list significantly delays the realisation of the vision to make JLD a vibrant second CBD. After all, it is uncertain if and when a party will trigger the sale of this site from the reserve list.

Certainly, there are good reasons to sell the JLD white site – which comprises three plots of land – to a master developer. The developer can comprehensively master plan the entire site to integrate the various uses, coordinate implementation of the development and adopt district-level urban solutions.

As interest rates soften, the appetite among developers for mega projects might improve. And should the proposed Kuala Lumpur-Singapore high-speed rail project restart, interest in the JLD white site could pick up as the Singapore station will be located nearby.

Still, given the risk appetite of developers as well as the gains to be reaped from developing JLD as the second CBD, the URA should quickly ditch the master developer model for the JLD white site and break the 6.5 ha site into several smaller sites for sale.

Possibly, participation from developers will be stronger for sites with more acceptable overall dollar amounts and shorter gestation periods of say a couple of years. For example, some developers who avoided the master developer site might be willing to bid for a part of it.

Guidelines can be imposed so developers build developments that are best-in-class on sustainability. Also, the authorities can work with disparate developers of various sites to help ensure that different developments are well-integrated with one another to the benefit of individual developments.

Pragmatism and resilience are hallmarks of Singapore. The onus falls on the URA and the numerous leading local and overseas developers who are active here to push on with building JLD to be a vibrant second CBD, regardless of whether the proposed high-speed rail project restarts.