A decade since the conceptualisation and growth of Marina Bay, Singapore’s CBD has been reshaped- particularly following the completion of One Raffles Quay, Asia Square Towers and Marina Bay Financial Centre Towers 1-3. Meanwhile, key luxury residential properties such as The Sail @ Marina Bay, Marina Bay Residences, , and Lumiere, have seemingly defined the exclusiveness of city living.
Notwithstanding the new physical provisions, the utility of Singapore’s CBD remains unchanged from earlier years. Comprising of Raffles Place, Tanjong Pagar, Shenton Way and now Marina Bay, the financial district is fairly active and even hectic, during working hours and quietens afterwards. Back in the mid-2000s, the introduction of new developments including residential projects carried the hope to inject more life into downtown Singapore, possibly creating a 24/7 hoursstyle of land usage. However, even with them being more or less in place, there is still limited human activity at night and weekends. A handful of entertainment outlets may be available on weekday nights for the yuppies and working crowds, but the CBD is effectively non-operational at weekends.
Recent weak performance of private homes in CBD
Rents and resale prices of major CBD-residential developments certainly weakened over the past two years, namely 2013 and 2014. This was mainly driven by overall weakened foreign professionals’ interest in renting homes in the city centre, of which the CBD is a subset. Specifically the city centre, or Core Central Region, includes districts 1 and 4, plus 9-11.
Rents of major residential properties have generally fallen by about 5-10% in 2014, following about 3-7% fall in 2013. For example, the median rent of The Sail @ Marina Bay was $6.16 psf per month in 1Q 2014, but the latest median rents was only $5.81 psf per month in 1Q 2015.
Median rents of key residential properties in the CBD
Rentals of non-landed residential buildings with at least 10 rental contracts signed in 1Q2015
Rentals of non-landed residential buildings with at least 10 rental contracts signed in 1Q2014
Source: URA Realis (Quarterly Rental Survey)
The wider property market dynamics and changing expatriate profiles were at play eroding rentals of CBD apartments. Resale prices have generally dipped by up to 10% there, as investors become more cautious about weakened leasing demand for such homes. but we must also look deeper into why CBD homes are essentially losing lustre, as tenants cut costs and opt for other seemingly-rejuvenated localities including suburban areas.
What’s missing in Singapore’s CBD?
Although new homes have increased the population density of the financial district, there is little life after a working day is over. The residential properties may have intensified land use but the opportunity cost is land that can be developed for new offices. Essentially, the ‘play’ element of the ‘work-live-play’ concept seems to have not fully taken off.
Undoubtedly, the physical makeover of the financial district incorporating residential properties signifies a milestone, but little appears to have been achieved regarding the softer aspects (i.e. human-linked utility) of the financial district. With land scarcity and the city-state still adopting exclusive land use for financial use and limited activity after the office hours, the existing land use model is not very efficient. Since new physical developments and infrastructures are already in place, the crux is to draw individuals to the CBD after the office hours and weekends.
Examining the basics
Before ascertaining the rightful visitors to attract during off-peak hours, it will be critical to examine the underlying reason for an escape from the CBD after office hours. Firstly, the CBD has been seen to be a stressful place where occupiers’ activities are purely business-centric. Although many young professionals aspire and take pride in a CBD working address, the relationship with it is confined to working hours. The competitiveness and pressure actually create avoidance by most employees, who do not wish to be associated with it in their free time.
The stress element in the CBD has become a factor in pushing out the workers and an acceptance of little activity after people call it a day worsens the predicament, even with available physical infrastructures and developments.
There may be a large group of residents occupying the new condominiums in the CBD. But their presence does not necessarily contribute to more activity or spending in the financial district, as the majority may just retire for the day in their condominium enclave, which provides a wide range of facilities. Many residents also hang out in choice entertainment belts like Clarke Quay, Dempsey, St James over the weekends, or mini-host in their apartments, as if entertainment is lacking in the vicinity.
Off-Peak City-Enlivening Strategies – draw crowds into CBD after office hours
It is an undeniable fact that Singapore’s CBD will still be predominantly for financial activities and is apt to be vacant in off-peak hours, especially at weekends. Actually, this is a main character of our CBD except that in terms of land economics this is a luxury in land scarce Singapore.With those working in the CBD avoiding it after the office hours due to stress, the direct strategy of injecting more life is to make the environment more relaxing during the non-working period.
Often office workers leave the city for family commitments after work. They will place the area as the last in their list during weekends and the after office hours. The key to effectively drawing people to the district is thus to use creative initiatives to people who are not working in the CBD to visit the CBD in the weekends. Retailers and entertainment providers may thus consider versatile business concepts targeting the younger and selected foreigners, who do not work in the CBD, who favour a quieter place like the CBD over the weekends.
It may be inspirational for youngsters to hang out and socialise with others in the CBD, as this is where their future workplace may beat. Familarity and affinity with the CBD and culture may well motivate students with genuine career aspirations before they join the workforce. In Hong Kong’s Central (i.e. its financial district), domestic helpers tend to gather together on Sundays, specifically around Exchange Square on Sundays, creating more buzz in the area. Central thus carries a beautiful picture of a meaningful place for the less well-off and foreigners on Sundays. In addition, IFC mall there is vibrant every day.
Health and fitness interest urbanites, as staying fit and energised is a popular pursuit. There are still a handful of gym-enthusiasts returning to the CBD over the weekends. It may be feasible to consider health-promoting concepts to retain this clientele..
Incremental steps
The financial centre in Singapore will remain most exclusive to the rising and high-salaried professionals in the commercial industry and this character should be preserved. But it doesn’t mean that the function of the prime land stops there. There could be further efforts to inject life into the CBD in off-peak times, although the peacefulness of the environment should generally be intact. Stakeholders, typically retailers can consider playing around with it, by providing alternative concepts over the weekends. It may also be useful to identify potential business opportunities and devise strategies to draw prospective crowds to the CBD on weekends.
Collaborative efforts of authorities with space providers, such as landlords and existing operations in the area, can potentially bring about overall success. The right formula may be achieved through various trials, which can transform re-invention into betterment. The vitality of the area doesn’t have to be measured by the quantity of its patronage, but rather, new visitors who can add value and intensify land use. With serious dedications to improve the CBD’s ambience and achieve 24/7 hr usage, it will certainly enhance the leasing and investment demand for the exclusive homes there. Owners of homes in the CBD will also appreciate further vibrancy of the locality, instead of a CBD that is flushed with commercial activity and stress.
This article appeared in The Edge Property Pullout of Issue 678 (May 25) of The Edge Singapore.
Ong Kah Seng is a director and Alex Sun is a senior analyst at R'ST Research.
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