Last week, a commercial site in Woodlands attracted strong interest from developers, including some of the biggest names in the business. Yesterday, the Government awarded the tender to a consortium of Far East Civil Engineering, Tannery Holdings and Sekisui House, which had beaten seven other bids with its offer of nearly S$634 million. That translates to about S$907 per square foot per plot ratio (psfppr), for the first commercial site put up for tender since the announcement last November of Woodlands Regional Centre as Singapore’s Northern Gateway.
The top bid was substantially higher than what the first development site at Jurong Regional Centre fetched in June 2010. The white site slated for commercial/residential/hotel use was contested by six parties then and the top bid submitted by Lend Lease was S$749 million, or S$650 psfppr. The keen interest in the latest tender is a testament to the confidence in the upcoming Woodlands Regional Centre, which is in close proximity to Malaysia’s special economic zone — the Iskandar region.
The growth momentum in Iskandar was given an extra fillip last week when the Prime Ministers of Singapore and Malaysia spoke after their annual retreat of the importance of the region and its “complementarities” with the Republic. Three possible locations for the Singapore station of the high-speed rail link to Kuala Lumpur have been identified and the Woodlands-Johor Rapid Transit System is also on track to be completed by 2018.
What does this spell for Woodlands Regional Centre? Does it have what it takes to be in the ranks of the Jurong and Tampines regional centres, which have undergone successful transformations?
Envisioned as Singapore’s Northern Gateway, Woodlands Regional Centre will incorporate retail, business, residential and lifestyle elements into its two districts — Woodlands Central and Woodlands North Coast.
Although the retail scene in Woodlands is not likely to match what Jurong can offer in the foreseeable future, the regional centre has its own unique selling points.
Firstly, Woodlands is the only regional centre with a coastal waterfront setting and residents can look forward to enjoying views of the Straits of Johor. The 2013 Draft Master Plan shows that the existing Woodlands waterfront will be expanded eastwards so that the entire stretch can be opened for public enjoyment. New residential developments will be built along the expanded waterfront park, while shipyard facilities in nearby Sembawang will also be relocated to create more space.
Secondly, job creation is likely to be at full throttle for the regional centre. Currently, Singapore’s major employment centres are located far from the north and there is high commuting traffic towards the city and the west during the peak hours.
This is set to change. The Land Use Plan unveiled last year shows that one important commercial belt called the North Coast Innovation Corridor spanning Woodlands, Sembawang, Seletar, Punggol and Sengkang West is expected to see a buzzing pool of research and development activities that could attract diverse economic clusters.
Companies planning to have operations in Iskandar could also take advantage of the improved connectivity between Woodlands and Johor, as well as between Woodlands and the city, with the development of the new Thomson MRT line and the North-South Expressway. When fully developed, Woodlands Regional Centre will provide an additional 100,000 jobs, boosting demand for housing.
IMPACT ON PROPERTY PRICES
In the past five years, the Government has launched tenders for two private and three Executive Condominium land parcels in Woodlands that can be developed into about 2,700 new homes. This is merely 2.8 per cent of the total uncompleted pipeline supply of 97,742 units. More housing supply is probably needed in Woodlands to support the growth in the jobs in the area.
At present, potential tenants looking to rent a private home do not have many choices in Woodlands. The supply of condominiums is limited, with only five projects having been completed in the area over the last decade or so. Some tenants working in the industrial parks in Woodlands have to resort to renting apartments and condominiums in Yishun and Sembawang.
Last year, the rental yields of District 25 (Woodlands) and 27 (Yishun and Sembawang) stood at 4 and 4.2 per cent, respectively, both outperforming the islandwide average of 3.8 per cent. In contrast, the prices of private homes in Woodlands have been largely underperforming those in the Outside Central Region (OCR), or suburbs, for all types of sales. The mismatch of capital value and yield could lead to appreciation in the home prices in Woodlands Regional Centre, although volatility is expected over the next four years amid the record completed units islandwide in both the private and public segments.
In addition, a possible rise in interest rates could also put a damper on price growth in the near future. Nevertheless, vibrant commercial activities and job opportunities will increase the popularity of Woodlands over the medium to long term.
Property prices in Jurong have been keeping pace with the development in the area since the unveiling of the 2008 Master Plan. Prices of non-landed private homes in Jurong have grown by 64 per cent since the first quarter of 2008, outperforming the 58.5 per cent growth in OCR homes.
Home buyers and investors need not wait too long for it to happen to Woodlands as long as Singapore continues to progress economically and stay on its decentralisation course to enable more Singaporeans to live near their workplaces.
By Christine Li – head of research and consultancy at property firm OrangeTee
Source : Today – 18 Apr 2014