Complete Property Market Updates of Singapore

April 24, 2008

URA’s Jurong Gateway plan draws mixed response

Filed under: General — Propertymarketupdates @ 2:56 pm

Consultants and developers hail alternative hub, but fear over-supply in medium term

PROPERTY consultants and developers have given a mixed reception to the Urban Redevelopment Authority’s (URA) plan for Jurong Gateway, which will have about 5.4 million sq ft of gross office area over 10-15 years.


 
While they welcome an alternative commercial hub that will provide lower-cost office space, some are worried about the timing that yesterday’s announcement – made at a point when there is sufficient confirmed mid-term supply – will have on sentiment.

Others are worried the announcement may scare foreign investors from the local office market because of potential over-supply in the not-too-distant future.

First, the positive views.

Jones Lang LaSalle’s Singapore country head Chris Fossick welcomed URA’s plans for the new commercial hub around Jurong East MRT Station, comparing it to Changi Business Park in the east, which has attracted backroom offices of financial institutions.

Both locations are similar – close to transport hubs and a substantial labour pool, Mr Fossick noted. ‘Singapore is in need of such facilities to provide an alternative to more highly-priced real estate in the CBD (central business district) for companies that don’t need to be in the CBD.

‘From a macro perspective, we can be more competitive as a country when it comes to office space. We can go to banks, IT firms or any MNC and say: ‘You have two choices in Singapore: CBD office space or good-quality office space in Jurong or Changi.’ We can say Singapore has office space that is expensive as well as space that’s inexpensive.’

Another advantage of decentralisation is preventing congestion in the CBD from getting worse, Mr Fossick said.

Giving a more cautious view, CB Richard Ellis executive director Moray Armstrong said: ‘The launch of the vision for the area comes at a time when there seems to be ample supply of office space catered for.

‘I wonder how strong interest will be in developing the new office space in Jurong because there is already quite a healthy level of confirmed office supply on the island, the bulk of which is a product of the government’s policy reaction in the past two years of releasing greater volume of land.

‘Office space in the Jurong Gateway location is untested, but if the government is taking a long-term view, it’s not unreasonable to envisage this location emerging as a Tampines equivalent.

‘Nonetheless, the target they have set looks pretty ambitious in terms of the overall quantum of space, even for a 10-15 year time-frame. After all, Tampines has existing and new office developments in the pipeline with a total net lettable area of about two million sq ft, and that would be over a span of 12-13 years.’

City Developments group general manager Chia Ngiang Hong also voiced concern about the timing of the release of office sites at Jurong Gateway.

‘Hopefully, the government will study the market situation carefully before it starts tendering out new office sites,’ he said. ‘Otherwise, it won’t be healthy to cause a massive over-supply in the market again.’

Source : Business Times – 5 Apr 2008

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