Govt reviewing land-use policies and planning guidelines

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Govt reviewing land-use policies and planning guidelines

Property players hail this, but say changes to enable flexibility in land-use are easier to implement for greenfield sites

Thursday, February 16, 2017

by Lynette Khoo
[email protected]
@LynetteKhooBT


A number of Singapore government agencies are working together to review land-use policies and planning guidelines to facilitate flexibility in land use, the Ministry of National Development (MND) has said.

"The implementation details are being finalised, and we will share them when ready," it said.

The brief comments came in response to queries from The Business Times following the call by the Committee on the Future Economy (CFE) for greater land-use flexibility by allowing complementary activities to be located near each other; this way, value chains and industries can be integrated and synergies enabled among developments in a precinct.

The CFE also proposed that flexibility of land use be allowed in industrial areas, given the blurring line between services and manufacturing; it added that this will open the way for businesses of different sectors and functions to co-locate, find synergies and catalyse innovation.

The Urban Redevelopment Authority (URA) is working with state industrial landlord JTC and the Economic Development Board (EDB) in the review. JTC and EDB are statutory boards under the Ministry of Trade and Industry.

Industry players BT spoke to hailed the ongoing review of the land-use regime as long over-due, but some say the review may not translate to material changes for existing sites, as the government still prefers to try out new ideas in pilot projects.

Knight Frank chairman Tan Tiong Cheng said greenfield sites, such as those freed up with the relocation of the Paya Lebar airbase and Tanjong Pagar seaport, are logical choices to execute innovative technologies and better ways of using space. Such greenfield sites present the opportunity to build shared infrastructure - transport modes, amenities and energy-saving initiatives.

Ku Swee Yong, key executive officer of International Property Advisor Pte Ltd, expects that any changes that come will likely be limited, either in geography or in the number and types of properties.

"In line with announced plans for Jurong Innovation District and North Coast Innovation Corridor, I believe the government will create a new combination of education-industrial mixed use, or education-office mixed use.

"This is not a huge departure from putting the science parks next to universities, except that instead of being located 'adjacent' to one another in their respective traditional zonings, we can expect these uses to be 'co-mingled'," he said.

To allow for this co-mingling of use - such as having an industrial building within a university campus - the government may need to create new zoning categories, he added.

Dennis Yeo, CBRE managing director of industrial and logistics for Asia, said that, to create new clusters of modern industries, the government has to create supply-led demand. This is exemplified by the success of one-north, a 200-ha development comprising businesses in the biomedical sciences, infocomm technology (ICT) and media industries.

"We should take advantage of our small location to allow for flexible (land) use," he said. He says low-cost manufacturers who cannot afford rents of more than S$1.50 per square foot (psf) a month will still be able to find space in the current industrial stock. (Rents in industrial estates with units suitable for production are typically under S$2 psf in this market.)

Mr Yeo dismissed concern that the changes in allowable uses for industrial land could affect office rents, saying that the market would find its own equilibrium. Besides, the government is able to calibrate future office supply to guide rents.

Regardless what form the changes take, "we've got to be clear with the rules, and the rules have to change with the times", he said.

Industry players say Singapore may need to create more zoning categories or expand existing definitions of use for industrial space.

They also cited another planning guideline which they deem too restrictive - that of the "60-40 rule", which requires at least 60 per cent of gross space in a building or strata unit to be used for industrial activities, with at most 40 per cent left for ancillary purposes.

Imagine a building with 300 strata units, Mr Yeo suggested. Going by the 60-40 rule, production activities will have to take up 60 per cent of each unit of at least 150 sq m - and this is repeated 300 times.

He proposed that one way to relax this rule may be to apply this principle at the precinct level, instead of at the building or strata unit level; this will open the way for certain floors within an industrial building to be used purely as offices.

The government has, in the past, rolled out "white" sites and business park white zones in the Master Plan to offer developers some autonomy in deciding the most appropriate mix of uses for each site. However, it has remained prescriptive in listing permissible uses and planning specifications for these sites.

JLL head of research for South-east Asia and Singapore Chua Yang Liang suggested that instead of spelling out acceptable ways to use the space in each zone, the government take a discretionary approach on what should be excluded in each zone and leave the rest to the private sector.

Dr Chua proposes that Singapore considers alternative ways of zoning that do away with narrowly defined, highly specific uses typical of traditional zoning.

The US practises what is called "performance zoning", under which land development and use are circumscribed by performance standards; for example, these standards can limit the intensity of development by stipulating the maximum level of noise or strain on the transportation system.

Dr Chua said: "The concept of work has changed, especially with the rise of the Internet of Things. Industry 4.0, as the Germans call it, is a major disruptor, but also a paradigm shift. The old single zone or industrial - clean and heavy - may not be sufficient."

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COMMENTARY

Singapore land-use policies should be more responsive to market changes

Thursday, February 16, 2017

by Lynette Khoo
[email protected]
@LynetteKhooBT


THE review of existing land-use policies and planning guidelines by the government is a step in the right direction, but until more details are fleshed out, no one should hold out for a massive rewriting of rules.

After all, the government's modus operandi has tended towards doing trial runs of new ideas in pilot projects and new industrial sites, rather than taking a broad-brush approach when changing planning rules for current sites.

That said, the planning authorities should see to it that the large stock of existing industrial space does not remain stuck in outmoded definitions of land use.

The response from the government to review the land-use planning regime came on the back of recommendations by the Committee on the Future Economy (CFE) for greater flexibility in land use so that complementary commercial activities can be co-located together.

Recognising the blurring of lines between services and manufacturing, the CFE urges greater flexibility of use to be allowed in industrial areas, so that businesses across sectors and different functional divisions can be sited near each other and so draw on synergies and expedite innovation.

The idea of introducing flexible and adaptable spaces in greenfield projects was already alluded to when the government unveiled its plans for the Jurong Lake District, more details on which are expected in the upcoming Master Plan.

Applying new planning guidelines in greenfield projects has the advantage of ringfencing the risks of implementing such new planning guidelines, but most industry players would readily agree that the current definitions of allowable uses for existing sites needs to be refreshed as Singapore's manufacturing sector continues evolving.

The changing face of the manufacturing sector was also flagged in the CFE report, which recognises that manufacturing increasingly encapsulates a value chain of activities ranging from design and R&D to logistics, marketing and after-sales services.

This has created a growing group of companies in a grey area; their business activity does not fit into existing neat and tidy definitions of "light and clean" industry, consigned to areas zoned "Business-1" (B1).

(Here, we are not referring to those businesses which blatantly misuse industrial space; accounting and legal firms, for example, should not be operating in such spaces.)

Indeed, as industries evolve, it will become harder for companies to fit into a narrowly defined list of land-use categories. One way to cope with this may be for the authorities to expand the definition of allowable uses for B1 space, or to create a new zoning category.

All industrial properties now sit on land zoned as B1 or B2, with B2 meant for heavy industries that have a greater environmental impact. However, this way of zoning, by level of pollution, may become less relevant as the manufacturing sector modernises.

Another planning guideline - known as the 60-40 rule - requires at least 60 per cent of gross space in an industrial building to be used for industrial activity. The need for such clear division between manufacturing and essential services has become highly contestable.

Certainly, the industry welcomes greater clarity on existing planning guidelines. The current property slowdown arguably provides a window for land-use policy changes to take place without rocking the market too much.

The CFE report also stresses the importance of retaining a globally-competitive manufacturing sector, with further value-added from manufacturing-related services.

To maintain manufacturing's 20 per cent contribution to the GDP as targeted by the CFE over the medium term, some economists note that companies and activities here have to continually move up the value-chain and add value to global supply chains.

CBRE's managing director of industrial and logistics for Asia Dennis Yeo said that globally competitive manufacturing companies require high-specification and flexible spaces because of their use of robotics and automation.

He believes that a majority of Singapore's existing industrial stock will not make the mark for "Industry 4.0" - a concept coined by the Germans to describe the digitalisation phase of manufacturing, one which is shaped by big data, advanced analytics and new forms of human-machine interfaces.

As Singapore continues to modernise its manufacturing sector amid rapid technological change, it is crucial that our industrial real-estate offerings support this continual evolution or is adaptable enough to changes.

JTC is widely expected to take the lead in providing such spaces for the Industry 4.0 in pilot projects such as the Jurong Innovation District.

But clearly, the definition of manufacturing has become so complex that deeper studies should be done to capture the scale and scope of the changes to get a better handle of how it is evolving beyond what the aggregate numbers tell us.

Doing this will enable the government to keep the country's real-estate offerings in step with the needs of industry.

It seems that the CFE also recognised that a "market-knows-better" approach is judicious when dealing with intense uncertainties in the future economy, which will be marked by disruptive technologies upending traditional businesses and industry cycles becoming shorter. The committee's report has signalled a significant mindset shift from picking winning sectors.

When the crystal ball is this clouded, land-use policies need to be more responsive to market forces. It is hoped that the review of Singapore's planning regime would not be seen as merely cosmetic by the private sector, nor will it take too long.

As industries evolve, we have to ensure that our planning rules do not lag behind evolving industrial trends and thus inhibit future growth. The current review by the government provides an opportunity to set things right.

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