A WHITE site 6.5 hectares (ha) in size in the Jurong Lake District has been released for sale to kick-start development of the largest commercial district outside Singapore’s city centre.

Spanning 365,000 square metres (sq m), the site has at least 146,000 sq m (about 1.57 million square feet) for the office component, and up to 166,000 sq m (to yield about 1,700 dwelling units) for its residential component. It will also include 73,000 sq m of space for complementary use, such as shopping and food-and-beverage businesses.

With the cost of land and development estimated to run into the billions for a mega project that will take up to 15 years to complete, developers are expected to move cautiously and work with multiple partners.

Asked who might step up, market watchers cited deep-pocketed companies with large scale mixed-use projects to their names – the likes of CapitaLand, Keppel Land, Mapletree, Lendlease, City Developments, the Far East group and GuocoLand.

The site up for tender comprises three plots of land between Jurong East MRT interchange and the future Jurong Lake District station. The winning land bid is expected to be north of S$2.2 billion, including a five-year option fee, said Wong Xian Yang, research head at Cushman & Wakefield.

The gross development value of the completed project could top S$8.5 billion. 

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Tricia Song, head of research for South-east Asia at CBRE, reckoned development land cost could be at least S$1,300 per square foot per plot ratio.

The site has garnered substantial interest from developers, both domestic and foreign, since it surfaced on the government land sale (GLS) programme last December, said Tay Huey Ying, head of research and consultancy, Singapore at JLL.

It would yield the largest supply of office units in a decentralised location released under the GLS programme since 2016, said CBRE’s Song. With the Central Business District (CBD) still the most sought-after office location, “a decentralised work place will have to be designed and planned well, targeted at the right occupier groups, and should offer cost advantages to attract occupiers”, she said.

Lee Sze Teck, Huttons senior director of research, noted that at 6.5 ha, the Jurong site dwarfs the previous master development tender for Marina Bay Financial Centre in 2005. That site drew a top bid of $1.91 billion or S$405 per square foot per plot ratio for the 3.6 ha site.

“We expect the market to be optimistic about the long-term potential of the Jurong Lake District to be the largest commercial node outside the CBD,” said JLL’s Tay. But in the short term, before critical mass is reached and infrastructural works are completed – particularly those affecting connectivity such as the Jurong Region Line and Cross Island Line stations – “there will be challenges in attracting office occupiers to the location”, she added.

A rash of planning requirements and green-building conditions could also moderate bid prices when the site is tendered in March 2024, Tay added. The economic climate then would have a bearing on sentiment too.

The massive parcel is the first to be launched within the 410 ha Jurong Lake District, and will be within 30 minutes of major business hubs such as Raffles Place and Tanjong Pagar in Singapore. Amenities and public spaces in the area will be within 10 minutes on foot, bicycle or by public transport.

Despite the difficulties, the Jurong Lake District site could be rewarding for the developer who chooses to undertake it, analysts said. 

The site is sold under the Master Developer approach, where one single developer will draw up the master plan, phase it, and carry out the entire development, including district infrastructure, provision of connectivity and public spaces. This would give bragging rights to the developer as founding partner in the development of Singapore’s second CBD, said Cushman and Wakefield’s Wong.

To help manage risk, the site can be developed in two phases, Lam Chern Woon, head of research and consulting at Edmund Tie, suggested. He noted that Phase 1 required a minimum of 70,000 sq m gross floor area (GFA) of office space and 600 private housing units, “which is relatively modest against the backdrop of a locality that has not seen a new private housing project launched since J Gateway in 2013, while existing commercial buildings have seen healthy occupancies”.

He added: “The 100-per-cent sell-out of J Gateway on launch day, coupled with a hiatus of 10 years, suggests that housing demand is already spoken for, notwithstanding the fact that JCube would be redeveloped in the near future to a mixed-use residential project.”

The option period of five to eight years would also enable the developer to assess market reception before starting work on the next phase.

There could also be “great advantages to being the first-mover, given the potential upside of the whole locality”, said Lam. 

At a briefing on Thursday (Jun 22), Yvonne Lim, group director of physical planning at the Urban Redevelopment Authority, said: “We have been sending strong signals to decentralise, to create growth centres to bring jobs close to where people are living.” 

She added that this meets many planning objectives: People will commute less, enjoy the extra time they will gain by working and living in the same environment. And their public-transport needs will be eased.

The Jurong Lake District is also envisioned as “a model sustainability district”, said Lim.

Plot 1, which spans 3.7 ha, was available from Jun 22. The developer can start works on Plot 2, which spans 1.7 ha, after the interim Jurong East bus interchange occupying the site moves to the Jurong East integrated transport hub. Construction works for the Jurong Region Line are currently ongoing on the 1.1 ha Plot 3, which will be available for development from June 2026. 

Bids will be evaluated under the Concept and Price-Revenue Tender Approach, which requires tenderers to submit concept proposals and tender prices separately. 

Each phase of the development must be completed within seven years, with the developer being required to build a minimum of 70,000 sq m GFA of office space and a minimum 51,000 sq m GFA of residential space among other requirements within Phase 1. They are also to include a supermarket and food court. 

The URA said that the government will sustain the development momentum in the area through the release of sites for sale, with supply carefully paced to take into account economic and market conditions.

Lim added that URA had engaged developers, potential tenants and prospective investors ahead of the launch of the site. 

She said: “We are confident that as we continue to plan and sell this site, we are able to continue to support developers’ needs.”

When fully developed, Jurong Lake District will also house the revitalised Chinese and Japanese Gardens, and the new Science Centre that will be completed around 2027. The entire district is expected to provide over 100,000 new jobs and 20,000 new homes between 2040 and 2050.