New incentive schemes welcome boosts for CBD; will developers bite?

Fri, Apr 05, 2019


THE two incentive schemes unveiled last week to help rejuvenate strategic areas of Singapore are welcome moves to spur redevelopment of the Central Business District and city centre.

Part of the Urban Redevelopment Authority's Draft Master Plan 2019, one scheme aims at livening up the CBD with a broader mix of uses including residential. A wider diversity of uses - including more residences, hotels and creative lifestyle possibilities - will encourage a much desired greater flow of human traffic into the CBD in the evenings and on weekends.

The other scheme seeks to encourage owners of existing commercial buildings in strategic areas to team up with neighbours for comprehensive redevelopment with bold proposals to transform the street or precinct. Under the Strategic Development Incentive (SDI) Scheme, owners of adjacent commercial or mixed-use developments in "strategic" areas (especially Orchard, CBD and Marina Centre) may join forces and come up with redevelopments that transform the locale.

Eligible building owners and developers may submit proposals seeking higher plot ratios as well as flexibility on land use, and building height. Market players see the SDI Scheme as a follow-on from an earlier incentive scheme for buildings in the Orchard Road belt that lasted from 2005 to 2015. One project that may have resulted from this scheme, observers say, is the Orchard Gateway development.

Both new schemes have been carefully crafted to try and achieve targeted outcomes while minimising negative side-effects.

For one, both schemes are open to developments that are at least 20 years old or have not had any major refurbishments in the past 20 years. That's one way of incorporating environmental sustainability into the schemes.

Moreover, the SDI Scheme is not open to developments with predominantly residential uses. This should help avoid reigniting a fresh round of residential en bloc sale fever.

The CBD Incentive Scheme will also be open only to predominantly office developments. This makes sense, too, given that the goal is to inject a bigger live-in population in the CBD. Chances are, though, apartments in the CBD will likely remain priced out of the average Singaporean's reach.

Overall, it remains to be seen if developers will bite at the two schemes. Anyone considering developing a hotel under the CBD Incentive Scheme may think twice, if a development charge (DC) is payable to the state. DC rates for hotel use were jacked up 45.6 per cent on average during the latest revision that took effect on March 1 this year. A developer would also factor in the loss of income while the property is being redeveloped and the construction cost of the new project.

The SDI Scheme is envisaged as involving owners of adjacent sites coming together for a comprehensive amalgamated redevelopment. But if the properties are in the hands of unrelated parties, will they be able to have a meeting of minds on how to go about a joint redevelopment?