How to make live-work-play work

05 Nov 2021

The Business Times, 5 Nov 2021, How to make live-work-play work
Amenities near your workplace. A home above your office. Shops and restaurants in estates island-wide. Singapore is no stranger to the idea of "live-work-play" (LWP), but a flurry of interest in mixed-use developments is revving up the concept. The Urban Redevelopment Authority's (URA) master plan calls for a revitalisation of the Central Area – which includes the central business district (CBD), Marina Bay, Orchard, Bugis and Rochor, and it is working to develop what it dubs "a more polycentric urban structure" with business hubs in other parts of the island. This approach "has created attractive blended precincts thatprovide a good variety of LWP options and self-sufficiency in each region", a URA spokesperson says.

The URA cites Woodlands and Changi as some "major economic gateways" outside the CBD, while Tay Huey Ying, research and consultancy head at real estate firm JLL, cites "the transformation of Jurong from swampland to a bustling industrial estate by the 1970s and 1980s", the Tampines Finance Park in the 1990s, and high-tech one-north in the 2000s.

Another success story has been the conversion of Keppel Corp's vacated shipyard into the luxury Keppel Bay waterfront precinct over the past two decades. Keppel paid a S$989.9 million premium to top up the lease and alter land use permissions for the 32-hectare former industrial site.

Louis Lim, chief executive of Keppel Land, says that "people like to have the flexibility and the convenience of working and living in places with close proximity", which drives private home projects such as Caribbean at Keppel Bay, Corals at Keppel Bay and Reflections at Keppel Bay, a marina, and office block Keppel Bay Tower. "This is definitely a trend, and this is something that the government sees as important as well, to add life back into commercial districts," he notes.

Outside the CBD, white sites up for tender as mixed-use projects and integrated transport hubs are expected to drive development of regions too. For instance, an 8.3-ha white site in Kampong Bugis, on the government land sales reserve list for the second half, is meant for master development over 11 to 13 years. It can yield 1,000 homes and 10,000 square metres of commercial gross floor area (GFA) in the first phase alone.

Frasers Property Retail CEO Low Chee Wah notes that decentralisation of the CBD has gone hand-in-hand with opportunities in areas like Tampines, Paya Lebar, Woodlands and Jurong "and that's something that we're quite active in", with projects such as Northpoint City and Punggol Watertown blending shopping centres, private apartments, and MRT links.

Researcher Harvey Neo, of the Singapore University of Technology and Design's Lee Kuan Yew Centre for Innovative Cities, adds that "we have seen the fringes in Geylang, Paya Lebar, Tampines drawing more and more" job opportunities: "What the URA can do, if they really want LWP to have concrete results, is release more parcels of land in these areas."

Yet obstacles to successful large-scale LWP precincts include having scalable user bases in the right locations, even as the pandemic rocks the basics of how people work and play. As such, the public authorities and private players alike agree that a big-picture approach is key to keeping LWP viable and vibrant long term.

Zone by zone

Over-building is a danger for projects, especially without a ready catchment of users in place. In that light, establishing a catchment for all 3 elements under one roof has been a main challenge to the LWP concept in Singapore.

Lee Nai Jia, deputy director of the National University of Singapore Institute of Real Estate and Urban Studies, notes that many residents are loth to live downtown, while suburbs lack a concentration of major employers: "In most cases in Singapore, the LWP concept tends to work well with just 2 out of the 3 components."

Consultancy Edmund Tie & Co (ET&Co) recently observed that singles, small families and foreigners make up a higher share of residents downtown than in other neighbourhoods, possibly as "there is a lack of primary and secondary schools".

Unfazed, Valerie Wong, GuocoLand's general manager of asset management, says that office space can "form a very good catchment" to anchor its integrated developments.

Both Guoco Tower in Tanjong Pagar, which was completed in 2016, and the upcoming Guoco Midtown project in Beach Road, are designed to combine office offerings with private housing, as well as retail and other amenities.

At the same time, collaboration with other property players has emerged as a strategy to nurture catchment, especially farther away from the built-up downtown area.

Australian property multinational Lendlease, which operates integrated development Paya Lebar Quarter (PLQ), points to the pilot Business Improvement District (BID) programme as crucial to building LWP community in a less built-up area of the island.

"You need to be able to do that when you haven't got the scale of a much-bigger shopping centre or precinct, like you do in certain other areas," Justin Gabbani, Lendlease's Asia CEO, tells BT. "So that network effect, and working closely with our adjoining owners is really important."

Anchored by PLQ, Paya Lebar Square and SingPost Centre, "new business hub" Paya Lebar Central, is now among 10 precincts in the URA's BID scheme, which was launched in 2017 to encourage independent private-sector efforts at vibrancy.

End-customers, such as shoppers and office users, should be agnostic on which property they are visiting "if we're doing a good job in the BID to coordinate everything together and make sure that we're providing a better amenity", says Gabbani. "The wider the catchment, the wider the group of people who can come into the Paya Lebar area, that's just broadening the pool of people who are using our product."

In that vein, Neo suggests it is not always the best idea to award a land parcel to a single contractor, despite better project "cohesiveness".

"Parcelling out to a few people will generate even more ideas... If you put a group of different companies having different slices of the thing, they have to work together, but they could come up with something that is really out of the box – and it's still also fairer."

JLL's Tay adds: "The true essence and benefits of live-work-play can be better experienced in the context of neighbourhoods and precincts so that there is sufficient scale to support the complementing uses and boost vibrancy and business viability."

Developers are also increasingly tasked with delivering user experiences – that includes securing quality anchor tenants.

Wong from GuocoLand says developers must go beyond high bids to also propose wellness elements, such as "urban park spaces which we would then in future activate" with events such as fitness sessions and artisan markets.
Stressing that "people are willing to pay more for experiences" and quality, Keppel Land's Lim adds: "From a branding perspective, if we have the ability to have communities we are able to point to as great references... that gives us more of a right to win new sites."

Flexibility needed

Developers are also subject to zoning regulations – but LWP is raising the profile of flexibility there, too. "A lot of this high-level planning is actually done by the government," notes Low of Frasers. "You can't convert a retail (space) into office... It's very much what the master plan has dictated for that area."

Still, developers tell BT that flexibility is welcome. Gabbani describes the authorities' original vision for the 3.9ha PLQ site as "an office project with ancillary retail", but says Lendlease decided to take up the optional allowance for up to 440 apartments because "we took the view that it would... enhance the precinct by having that residential component".

"It did make the development more complicated, but we did think that it added to the ingredients of the development and to the place it created," he notes, with PLQ eventually allocating about 50 per cent of GFA to office space, 30 per cent to retail and "just under 20 per cent" to residential.

Low tells BT that the URA has been open to industry feedback on land use permissions. Site flexibility may have become even more important with how the Covid-19 pandemic is changing the way real estate space is used.

A downtown white site in Marina View, which was recently awarded to a unit of IOI Properties, was distinguished by its "small office component", one BT commentary noted.

"Digitalisation may enable greater adoption of remote working and reduce demand for office space. Might a future-ready CBD be much less office-centric?" journalist Leslie Yee asked.

"It's a challenge – but it's also an opportunity if you're willing to be flexible with design and regulation," Neo, the researcher, says, as he describes the risk of a hollowed-out CBD. "There must always be a flexible percentage of buildings in the downtown core that can be easily repurposed into housing, offices or retail... It demands a very fundamental shift in our planning philosophy."

Granted, the URA already expects some pandemic-related changes to land use to become permanent, which will affect the way that the agency plans, its spokesperson notes. She adds that the URA will monitor economic trends and engage relevant stakeholders: "Depending on how the trend on working from home develops, we may adjust how much office space we provide, and how they are distributed across Singapore. These, in turn, will have an impact on how the CBD and other regions will be developed in the long term."

On their part, developers are also looking to tweak projects in progress, to accommodate these changes.

Keppel is already incorporating work-from-home-friendly elements into The Reef at King's Dock, such as function rooms designed for co-working and second bedrooms that can be repurposed into home offices, while Frasers has tied up with co-working space operator JustCo to install "work booths" in its retail properties.

Adds Neo: "Even if we pass the regulatory restrictions, the building itself has to be designed with flexible conversion into other uses in mind."

Social welfare

Large developers are keen on white-site land parcels because integrated developments both add value to their brands and confer the advantage of recurrent income, which lessens a reliance on land-banking, Lee has noted, while JLL's Tay describes interest in such sites as generally healthy despite barriers to entry.

When asked about the investment rationale for such mixed-use projects, GuocoLand's Wong tells BT: "If you get it done well, it actually enhances all the different uses."
Gabbani says that mixing residential space, transport connectivity and amenities raises not just "demand for the product but also the premium in pricing you can attract" across all of Lendlease's markets, including its PLQ project in Singapore.

Lee estimates that residential properties in a mixed-use project can command a rental and price premium of 5 per cent to 10 per cent over a purely residential project, assuming that the attached mall is sizeable enough – around 180,000 square feet at least.

Lam Chern Woo, head of research and consulting at ET&Co, adds that the pandemic may have given a boost to expectations of a "holistic living environment".

"As the premium for mixed-use projects increases, we could see some outperformance over the next 2 to 3 years," he says of capital returns, although he is unsure how long the uplift will last.
While watchers find it harder to estimate the premium for commercial rents in integrated developments, one source tells BT that "the main benefit would be for the retail component", with a possible rental premium of around 10 per cent if the shop space is well-integrated with a solid residential and office base.

Yet, even if rewards accrue to the private sector, views on developers' public responsibilities are mixed.

"My personal stance is that the government shouldn't be involved in too many of these private endeavours if they can help it. The restrained manner in which they are doing this is something that I agree with," says Neo.

But, calling for more public consultation on the issue, Jan Lim, director of research and strategy at Singapore-based community design non-profit Participate in Design, asks whether stakeholders, such as residents in nearby public housing, can derive value from being "part of this kind of ecosystem or to have these (projects) sited near them".

"We really need to speak to the diversity of people who might be impacted by such a project. Not just your middle-class residents, not just your rental flat residents, you're also talking about your white-collar workers, the hawkers," she says. "Can projects that are socially inclusive, socially sustainable, also be part of the key performance indicators of the private developers?"

To be sure, the URA's brief for the Paya Lebar BID highlights initiatives "to reflect the rich Malay and Peranakan heritage", among other priorities.

Says Gabbani: "Whether it be the Geylang Serai area or the local community centres, etc, (a dedicated staff member's) whole focus... was around that community engagement, and we made a lot of effort, through that development process, to ensure that they were engaged and excited about what was happening."

In fact, input from the authorities is a must for shaping a successful, sustainable development, according to Low, who says: "If you want to connect to the transportation node, for example, if you don't set parameters and you don't define it, it's very hard to ensure whatever comes out would fulfil the needs of the people.

"As long as the parameters are set clearly... that's fine. Most of us would know how to price that in, in terms of the development, and incorporate it."
Lee adds that developments benefit from private-public tie-ups "because the public sector, no matter how well-planned, still needs some understanding of the market, what works and (what) doesn't".

Despite challenges, investor interest in integrated developments remains high, with Gabbani saying: "We continue to focus on what I would call master-developer type opportunities – bigger projects like PLQ, which are generally going to be located around the sub-regional and regional areas.

"We interact and have a very close relationship with the URA on how they are master-planning Singapore and where their focus areas are... so those are of particular interest to us. We're probably less focused on the single-use, smaller developments."