Complete Property Market Updates of Singapore

March 31, 2008

Parking squeeze may take shine off new buildings

Filed under: General — Propertymarketupdates @ 4:14 am

Rules vastly reducing carpark lots in new office buildings and malls are poised to bite.

New office buildings and shopping malls coming up in the central areas of Singapore – especially in new downtown Marina Bay – are likely to feel the full force of existing rules limiting the number of parking spots allowed for each building.

And with a whole slew of commercial buildings nearing completion over the next few years, a severe shortage of carpark lots is imminent. New ‘white’ sites, such as the Marina View land parcels, get just one carpark spot for every 425 sq m – or 4,575 sq ft – of commercial space. White sites can be developed into a combination of uses.

Developers are allowed to provide more spots, but at the expense of giving up office or retail space. As yields for commercial space are significantly higher than those for carpark lots, most will not do so.

What this translates to is quite startling – a company that takes up one entire floor in Marina Bay Financial Centre (MBFC) with a large floor plate of 25,000 sq ft could be entitled to just six carpark lots.

Similarly, in a medium- sized building, a company occupying an entire floor – or some 10,000 sq ft of space – will get just two parking spots.

And for the upcoming mega office building on the Marina View site, this means that the 1.7 million sq ft of office space the owner is required to provide would entitle the development to around just 380 parking spots.

While the rules have been in place for all new buildings since May 2002, the impact has not really been felt so far because in the old central business district (CBD), an excess of carpark lots in older buildings make up for the shortfall in newer ones.

Golden Shoe Car Park and Market Street Car Park also provide some much-needed supply.

But for new downtown Marina Bay, there will be no such buffers. Buildings in the area will mostly all be new – which means that they will not have excess carpark spaces.

‘The ruling is a bit harsh, especially if you look at all the big projects coming up in Marina Bay,’ said one local developer. ‘Those buildings will have thousands of workers, and only a few hundred carpark lots each.’

Singapore is trying to attract more financial institutions, which means that more professionals from the banking and financial services sectors are expected to relocate from abroad. But some of them may find that they cannot drive to work, the developer added.

Macquarie Global Property Advisors’ Marina View development – which combines two sites won in government land tenders – is one building that will likely be hit by the shortage, industry players said. The project is required to provide some 1.7 million sq ft of office space.

MBFC, on the other hand, is expected to fare slightly better. Although the building is a white site and therefore subject to the ‘one carpark lot for 425 sq m of commercial space’ rule, it also has ‘hub status’, which means that it is allowed to have slightly more carpark lots without having to sacrifice its commercial gross floor area (GFA). But while Marina Bay will likely be the first to be hit, the existing CBD is also going to face the same problem in the future, market watchers said.

‘Right now, the CBD is managing,’ said Nicholas Mak, director of research and consultancy at Knight Frank. ‘But if developers continue tearing down and then building new buildings, then we will have a problem.’ This is because new projects on the sites of old buildings are also subject to the newer guidelines.

For some of these buildings, the number of parking spots will be reduced from one for every 400 sq m (4,306 sq ft) of office space to one for every 425 sq m (4,575 sq ft). Parking space was a lot more liberal in some older buildings.

Adding to the woes of drivers is also the impending loss of Market Street Car Park. CapitaCommercial Trust (CCT) recently said that it has been granted planning permission to redevelop the building into an office tower.

Other than office buildings, any upcoming new shopping malls, hotels, cinemas, theatres, restaurants and bars will also be affected. The impact will be greatest in the central areas, but are also being felt elsewhere – especially for white sites.

A retail development slated for a plum white site above Serangoon MRT Station will have only slightly over 200 carpark spots – which Danny Yeo, Knight Frank’s deputy managing director, said would be a ‘tricky situation’. The mall has a maximum permissible GFA of 942,132 sq ft.

By contrast, Singapore’s now-largest suburban mall Causeway Point has a GFA of 629,160 sq ft of GFA and 915 carpark lots. Even then, it gets ‘pretty crowded’ during the weekends as the mall is the only shopping centre in Woodlands, a spokeswoman for Frasers Centrepoint said.

Industry players believe the squeeze is part of the government’s move to push more people to use public transport. But developers point out that the shortage of parking spaces will come at a time when the car population is climbing.

BT understands that for the Serangoon site, analysts recommended that the authorities provide close to 1,000 parking spots. But despite this, only over 200 units were allowed. ‘Shopping centres without enough carpark lots will suffer,’ said one property analyst. ‘There will be a complete change in shopping patterns.’

When contacted, the Land Transport Authority (LTA) said it currently regulates parking by stipulating the minimum number of car parking lots to be provided based on the given floor area of a development. ‘Developers may build more carpark lots but they have to balance them with the opportunity cost of the additional space.’

Source : Business Times – 29 Mar 2008

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