Updated from : The Business Times, 1 Nov 2021
THE Urban Redevelopment Authority (URA) has turned down an outline application for the proposed redevelopment of International Plaza in Tanjong Pagar under the Central Business District (CBD) Incentive Scheme.
The outcome is seen as having implications for the ongoing collective sale tender for the property, which has a S$2.7 billion reserve price; if achieved, this would be the highest for a collective sale. The tender closes on Nov 30.
URA unveiled the scheme in 2019 to spur owners of older predominantly office buildings in specific parts of the CBD to redevelop their properties into mixed-use projects. Owners would be allowed to build more gross floor area (GFA) – beyond the plot ratio in Master Plan 2019 or the approved plot ratio, whichever is higher (plot ratio is the ratio of GFA to site area). The idea is to inject a live-in population, liven up the district in the evenings and on weekends and rejuvenate the CBD.
When the tender for International Plaza was launched on Sep 1, its marketing agent Edmund Tie & Co said that the property meets the qualifying criteria for the scheme – in terms of building age, current land use and site area. When contacted, URA’s spokesperson told The Business Times that the qualifying criteria provide a framework to guide the detailed evaluation, which will also factor in existing ground conditions and specific site context.
In the case of International Plaza, it currently has a good mix of uses – ranging from residences to retail, food & beverage and personal services, in addition to offices. “Hence, even without redevelopment under the CBD Incentive Scheme, International Plaza is already in line with the planning intention, and is in fact functioning as an amenity centre for the area,” she added.
URA had also noted in early October, in its refusal of written permission for the outline application, that “unlike most mono-use office-centric developments in the CBD, International Plaza has a good mix of uses, including a significant residential component that occupies more than 20 per cent of the total building floor area”. Moreover, the building intensity of the existing development, at 19.24 gross plot ratio, is “substantial and considerably higher than the surrounding developments” in Tanjong Pagar such as Guoco Tower, Twenty Anson and Springleaf Tower, said the spokesperson.
“Taking these into consideration, we have assessed that the development is not eligible for the CBD Incentive Scheme,” she added.
The 45-year-old International Plaza’s current 19.24 plot ratio – based on its nearly 1.45 million sq ft existing GFA – is nearly double the 10.5 plot ratio allocated for the commercial-zoned site under Master Plan 2019.
Analysts say the implication of URA’s decision on International Plaza’s en bloc sale is that without the benefit of the additional 25 per cent GFA that would have been granted under the CBD Incentive Scheme, the reserve price reflects a higher land rate of about S$2,448 per square foot per plot ratio (psf ppr); this is based on the existing GFA.
The land rate would be S$2,170 psf ppr had the URA given its nod to the proposed outline application submitted by Edmund Tie on behalf of International Plaza’s collective sale committee.
Both land rate figures are inclusive of payment to the state to top up the site’s lease to 99 years (from the current balance of around 47.5 years) – and, if applicable, a differential premium for intensification and/or change or use.
Karamjit Singh, chief executive of property investment sales specialist Delasa, said that applications by building owners for the CBD Incentive Scheme “do unfortunately come with risks of refusal, which we reckon the owners would have considered when applying”.
He added: “Also, the scheme is targeted at old, predominantly office buildings. With that, International Plaza’s case would have always been borderline given its existing residential component.”
While some observers were surprised by URA’s decision, they do not expect wider implications for other office buildings that qualify for the CBD Incentive Scheme. “International Plaza is unique in that it’s massive, built well over Master Plan, and it has a reasonably-sized residential component,” said Singh.
Standing next to Tanjong Pagar MRT Station, the 50-storey development is on a site released under URA’s third sale of sites, back in 1969.
Tan Hong Boon, executive director of capital markets at property consulting group JLL, said: “There are many buildings in the CBD with existing GFA reflecting an equivalent plot ratio similar to or higher than what’s specified in Master Plan 2019 but the difference is not to the extent as what we see at International Plaza. Also, these buildings comprise predominantly offices.”
The outline application submitted for International Plaza’s proposed redevelopment under the URA scheme was based on “commercial use with 40 per cent non-commercial uses such as residential”.
The proposal envisaged a 280-metre high, 62-storey project with 24.05 plot ratio (1.8 million sq ft GFA) comprising 175 strata retail units and 698 strata office units (for the 60 per cent commercial component); 778 strata apartments (30 per cent residential component); and a 368-room hotel (10 per cent) .
In turning down the application, URA also issued advice on alternative development options and stipulated the planning guidelines and parameters for the site. The allowable intensity remains at the existing 19.24 plot ratio. Based on commercial land use, the project’s residential quantum should at least match the existing residential quantum on site, at 326,808 sq ft (excluding any bonus GFA). There will be no further increase in the office quantum, which will be capped at 945,737 sq ft in the new project. The project’s overall height control is 250 metres.
For the commercial component, strata subdivision is allowed only to delineate between the various uses, for example, retail and offices; there shall be no strata subdivision into individual commercial units (as proposed in the outline application).
This is to ensure that the property continues to be well-maintained and managed under a common and co-ordinated ownership, said the URA spokesperson. “URA has restricted strata subdivision of the commercial component of private-sector redevelopment proposals on prominent sites, as the upkeep of these properties is important to the overall image of the area. International Plaza occupies prominent frontage along Anson Road, a key corridor in the CBD.”
Given the planning intention to introduce a greater mix of uses in the CBD and encourage more residential spaces in the Central Area, the URA suggested that the owners may wish to consider alternative land-use zonings such as commercial and residential (at least 60 per cent of GFA has to be for residential and up to 40 per cent for commercial use).