Previously, we touched on how the extension of the Central Business District Incentive (CBDI) and Strategic Development Incentive (SDI) schemes matter in the CBD’s revival, serving as catalysts for the redevelopment of older buildings in the city. In much the same way, we believe that Marina South – the extension to Singapore’s CBD – will play a pivotal role in transforming our country’s landscape.

The evolution of the CBD

1800s
Singapore’s first commercial district traces its humble beginnings to the early 19th century, where it took shape along the banks of the Singapore River. Strategically located along the Maritime Silk Road, the Singapore River quickly established its presence as one of the important free ports facilitating trades between China, India and Southeast Asia.

During this period, shophouses were built along Boat Quay, Clarke Quay, and Raffles Place to support the thriving trade and growing business community. Banks and related businesses gravitated towards the area, shaping it into Singapore’s first commercial district.

Source: Kouo Shang-Wei Collection, PictureSG, National Library, Singapore

By the early 1900’s, Singapore’s growing importance as a major port led to overcrowding in its commercial district. A lack of urban planning saw shops, houses, and factories all cramped into the same area. This led to issues like road congestion and pollution that gave rise to health and environmental concerns.

This slew of problems prompted the Singapore Government to undertake a major urban renewal program in the 1960’s and 70’s, aimed at creating a more systematic approach towards transforming Singapore’s built environment.

Through the Land Acquisition Act and the Government Land Sales (GLS) or Sale of Sites programme introduced in 1966 and 1967 respectively, the Singapore government was able to address the issues of fragmented land ownership and the need for a more regulated process for land acquisition by the private sector. Together, these changes set the stage for the development of our modern CBD.

Rethinking CBD with modern skyscrapers

With the government’s urban planning efforts laying the foundation, the next phase of development focused on modernising the CBD with high-rise office buildings. Hong Leong Building (1976), OCBC Centre (1976), UOB Plaza (1972) and Singapore Land Tower (1980) were some of the first skyscrapers in Singapore’s CBD that are still standing to this very day.

Far beyond shaping Singapore’s skyline, these office buildings played a pivotal role in meeting the real estate demands essential for supporting the growth of Singapore’s financial centre.

In the early 2000’s, Singapore continued to solidify its status a regional financial hub, leading to a significant increase in demand for office space since. As demand for offices grew, commercial properties have reported a strong growth trajectory amid tight vacancies. These assets have also proven to be valuable investment opportunities for institutional investors and private entities seeking stable returns and long-term capital appreciation.

Beyond offering excellent office infrastructure, the CBD is also supported by an extensive transport network that reaches all parts of Singapore. More importantly, it plays the role of a hub that serves Singapore’s business ecosystem by facilitating networking and trade.

In the 2024 Global Financial Centre Index, Singapore placed fourth out of 133 global financial centres, cementing its status as one of the world’s leading financial hubs. This could drive the demand for more office space within the CBD. With office space in the existing CBD becoming increasingly constrained and demand for sustainable developments rising, Marina South presents a timely expansion for Singapore’s business district.

Marina South: Birth of Singapore’s new sustainable mixed-use neighbourhood

Source: URA

Source: URA

Marina South is set to evolve into a mixed-use residential neighborhood, featuring retail, hotels, offices, and amenities, all within a 10-minute walk. Through the GLS programme, Marina South is currently undergoing a Master Plan transformation in the hands of URA.

In 2023, a consortium led by developer Kingsford Group put in a top bid of $1,402 per square foot per plot ratio (psf ppr) for a site at Marina Gardens Lane, which will be developed into a new residential project. Set to yield 937 units, the development is expected to launch in 2025, thus setting the stage for one of Marina South’s pioneering projects.

Source: Kingsford

Subsequently, in January 2024, a white site at Marina Gardens Crescent received a single bid from a GuocoLand-led consortium at $984 psf ppr. URA rejected the bid, opting instead to hold onto the site for a fair price instead of accepting an undervalued offer.

This decision reaffirms URA’s commitment towards upholding and preserving the value of Singapore’s land.

In Conclusion

As Singapore continues to draw international businesses and talent, Marina South will play a pivotal role in shaping the future of Singapore’s urban landscape. Offering more than just a modern, sustainable, and people-centric environment that supports our city-state’s economic growth, Marina South also sets the stage for a vibrant new residential district – one that Singaporeans can be the first to call home.

Interested to know more about what the estate offer to prospective homeowners and tenants? Speak to any ERA Trusted Advisor today to find out more!

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

This article was written in collaboration with Tay Liam Hiap, Managing Director of Capital Markets and Investment Sales.

The Central Business District Incentive (CBDI) and the Strategic Development Incentive (SDI) schemes were first launched in 2019 by URA to encourage the redevelopment of older buildings in the CBD and strategic areas. One may ask: why is there the need for such schemes?

Singapore’s landscape is always changing. The CBD’s skyline, despite its modernity is still dotted with clusters of older commercial buildings that have since outlived their glory days. These developments may be less relevant to modern-day needs and may be in stark contrast to the sleeker, more modern commercial buildings. As these commercial buildings age, maintenance costs can get increasingly expensive, and poor ventilation or air quality could contribute to the sick building syndrome, impacting the well-being of occupants. All of these factors are driving the ongoing flight-to-quality trend as tenants seeks prime spaces which offer a better, more comfortable working environment.

Why the need for these schemes?

To address this, the CBDI scheme and the SDI scheme were introduced in 2019 to encourage owners to redevelop older buildings into mixed-use developments aimed at transforming the CBD into a vibrant 24/7 mixed-use district.

Same motivation but different approaches

CBDI scheme

The CBDI scheme is confined to office developments, that are at least 20 years from completion, and are within the selected parts of the Anson, Cecil Street and, Robinson Road Shenton Way, Tanjong Pagar precincts. To safeguard the quality of these redevelopments, the sites are required to meet a minimum site area (1,000 to 2,000 sqm) and are not allowed to be strata subdivided. Successful proposals could be granted an additional 25% to 30% Gross Floor Area (GFA).
In 2025, the CBD incentive scheme 2.0 was updated to allow office buildings in the Anson and Cecil Street precincts the new option to include long-stay service apartments as part of their mixed-use developments.

Picture 1: Anson

Picture 2: Cecil Street

Picture 3: Robinson Road, Shenton Way & Tanjong Pagar

Since its launch, 14 out of the 17 CBDI applications were granted in-principle approval. This includes projects such as Newport Plaza (former Fuji Xerox Towers), The Skywaters (former AXA Tower), Realty Centre, Shenton House, 51 Anson Road and 15 Hoe Chiang Road.
Following this extension, could we see developments such as GB Building, Tong Eng Building, Cecil Court, and Springleaf Tower take advantage of the scheme and undergo redevelopment in the new future?

SDI scheme

Separately, the SDI scheme is designed to encourage redevelopment of older buildings in strategic areas including Orchard Road, wider CBD areas that fall outside the designated zones for the CBDI scheme, and Marina Centre. To qualify for the SDI scheme, a development must be at least 20 years after completion, be either a commercial or mixed-use development, and more importantly, the redevelopment must involve at least two adjacent sites.
So far, the SDI Scheme has granted seven in-principle approval for 12 applications. These include Union Square (former Central Mall & Central Square), new hotel development (former Faber House and asset enhancement of Odeon Tower), and the redevelopment of voco Hotel, The Forum Mall and HPL House.

Picture 4: Forum The Shopping Mall

The requirements for the SDI scheme are stringent, and finding an adjacent site that is willing to undergo joint redevelopment can be challenging. For that reason, the Far East Shopping Centre was unable to obtain approval to redevelop under the SDI scheme. This underscores the challenges and limitations of the SDI scheme, which can discourage some older developments from pursuing redevelopment.

Picture 5: Far East Shopping Centre

Why are there not more owners taking up the schemes?

Despite the attractive incentives, not all building owners are ready to take the plunge and participate in these schemes. There is a myriad of reasons, but the more commonly cited ones includes the high cost and inconvenience of redevelopment, the complexity of the scheme (particularly in the case of the SDI scheme), and conflicting views among stakeholders regarding redevelopments. For others, it boils down to complacency, as their older assets continue to generate attractive yields since many of them were acquired years ago.
Moreover, many of the older commercial buildings in the CBD are strata-titled and the redevelopment option will entail a lengthy collective sale process whereby 80% of owners’ consensus is required.

But with a shift in demographic trends and evolving real estate needs, it may make more sense for older developments to embark on redevelopment to avoid becoming obsolete or displaced in the medium term.

The Mandatory Energy Improvement (MEI) regime implemented in September 2024, which requires energy audits and energy efficiency improvement measures to be carried out for commercial buildings with more than 5,000 sqm of gross floor area, may also prompt owners of older commercial buildings to consider the redevelopment option, especially for buildings with short remaining lease tenures.

For now, these older buildings carve their niche by offering attractive office rental rates for smaller companies who want to stay within the CBD precinct. Likewise, older strata-titled retail malls served as a haven for mom-and-pop shops where affordable rents allow them to service their long-time customers who value familiarity.
But eventually, as the broader decentralisation strategy gains stronger traction, smaller companies may see more value in relocating to regional centres which are within a short commute to the CBD. E-commerce and shift in demographic could also see the irrelevance of mom-and-pop shops, as young shoppers are increasing purchasing items through websites and social media platforms.

Furthermore, as sustainability reporting becomes more stringent, companies may avoid leasing older buildings completely due to the negative impact on their sustainability metrics.
Over time, rental demand for older buildings may decline, impacting the overall yield. Perhaps it is time to consider redevelopment and future-proofing their assets.

Could CBD become the up-and-coming residential enclave as more are projected to participate in the CBDI scheme?

As more developments participate in the CBDI scheme, we can expect to see more residential homes within the CBD. As at end-2024, District 1 (Raffles Place, Cecil, Marina, People’s Park) and District 2 (Anson, Tanjong Pagar), has over 9,000 homes.

With the completion of Newport Plaza, The Skywaters, 15 Hoe Chiang Road and 51 Anson Road, the Anson-Tanjong Pagar area could see more than 1,000 new homes, hotels and retails offerings. At the same time, with the enhanced CBDI scheme 2.0, selected redevelopment sites can opt to redevelop as commercial spaces with long-term service apartments. These initiatives will expand the residential offerings in CBD to accommodate the growing workforce. Opportunistic investors may view this as a chance to acquire a home in CBD to capitalise on potential future growth.

Picture 5: Newport Plaza

In conclusion

The extension of the CBDI and SDI schemes reflects URA’s commitment to drive rejuvenation in key strategic areas. The transformation of CBD into a vibrant mixed-use district will further enhance its appeal as a residential enclave and present astute investors the opportunity to capitalise on potential future growth. But the success of these schemes hinges on the willingness and collaboration from these owners to drive the redevelopment. Looking beyond the inconvenience, redeveloping these buildings could help owners future-proof their assets, ensuring long-term growth while supporting sustainability efforts in the Singapore urban landscape.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

Abundance of BTO flats to ease HDB resale market

 Some Singaporean couples have successfully own two properties. But careful long-term planning is a must.

For many Singaporean families, the pinnacle of housing aspiration is to own at least two properties in their lifetime – one serving as the roof over their heads, and the other, a means to generate consistent cashflow.

To achieve this, some Singaporean families have embraced the FIRE movement, aiming to achieve Financial Independence and Retire Early by cutting back on non-essential expenses. Others, particularly Baby Boomers and Gen-Xers, have successfully achieved dual-home ownership by capitalising on property booms over the years.

However, amid rising home prices today, is this dream still attainable for Gen Z and younger Millennials?

Below, we explore how some Singaporeans have successfully own more than one property in Singapore—whether it’s an HDB flat and a private home, two private properties, or a combination of residential and commercial/industrial properties.

1.    Owning an HDB flat and a Private Home

HDB BTO versus resale flat

For many first-time homebuyers, their housing journey typically begins with an HDB flat, the most prevalent form of public housing in Singapore. More importantly, Singaporeans will have to decide between buying a new or resale HDB flat, even though both options allow them to benefit from first-timer subsidies. So how do they choose?

Build-to-Order (BTO) flats are essentially brand-new HDB flats meant for Singaporeans only. They are offered at subsidised prices and come with a fresh 99-year lease. But buyers will need to ballot for the opportunity to purchase a BTO flat, and due to intense competition, not all first-timers are successful in securing a BTO flat.

In addition, “Plus” and “Prime” BTO flats are subject to a longer 10-year Minimum Occupation Period (MOP) and more stringent resale criteria. It is also important to note that “Plus” and “Prime” flats cannot be rented out entirely even after MOP.

Meanwhile, resale flats are sold on the secondary market, typically by another homeowner and their prices are determined through negotiation. Currently, these flats are subject to a 5-year MOP. After this period, owners are allowed to rent out the entire unit, making such homes ideal for those seeking passive income from a second property.

Some couples have bought HDB flat by registering ownership in one partner’s name, while listing the other as an essential occupier. After completing their MOP, the essential occupier spouse proceeds to purchase a second property.

That said, in this scenario, each party must be able to secure sufficient loan to finance the purchase of their corresponding property.

For others, they have bought their next private property after meeting their MOP and paying ABSD.

Alternatively, after meeting the MOP, HDB flat owners can now consider buying their next private home. HDB flat owners can keep their existing HDB flat while buying a second residential property, but they will need to pay the ABSD.

2.    Owning Two Private Properties

a.      Paying ABSD to own two private properties as a couple

A Singapore couple with an existing private property will be able to hold two properties concurrently, provided they pay ABSD on their second home. Scenario 1 above outlines the implications of this strategy.

b.      Decoupling and buying two private properties

Alternatively, couples can choose to decouple and purchase two private properties on the onset. The prerequisite, however, is that both parties will have to secure loans for their respective purchase.  This also ensures each spouse has individual ownership of their property.

Otherwise, if both spouses share joint ownership on a property, they may consider decoupling. This process involves one party selling their share of the property to the other. The purchasing party must also have sufficient CPF funds and/or resources to afford their partner’s share. Once completed, the selling party is free to purchase another property without incurring ABSD.

3.    Owning a Private Property and a Commercial/Industrial Property

If you are looking to co-own a residential property and want to avoid ABSD entirely, you might want to consider investing in a commercial or industrial property instead. The key difference is that mortgage loans for such properties can only be financed with cash, not through CPF, which is commonly used for residential properties.

Owning a commercial or industrial property as an investment property is relatively straightforward, and not as daunting as many people believe it to be. There are plenty of strata commercial and industrial units available in the market that cater to various budgets.

An investor with good credit status may be granted up a loan amounting to 80% of the property’s value, with the remaining 20% payable in cash as a deposit.

For example, if a freehold second-floor retail unit is priced at $1 million, and the buyer can secure an 80% loan, they will need to place a $200,000 deposit for the property. Supposing the shop is currently tenanted, the buyer will have immediate cash flow to support the loan payments.

In closing

So, there you have it—three strategies for how a Singaporean couple can achieve their property dream of owning at least two properties concurrently. That said, there are other factors to consider. In the event of a dispute, how will the assets be distributed? Additionally, one must be careful in assessing the impact of higher property taxes against the financial viability of their investments.

In short, the dream of owning multiple properties is still attainable for Singaporean couples. But before you take the plunge, be sure to consult with your professional ERA salespersons and bankers to effectively plan and execute your roadmap to dual property ownership.

Disclaimer

This information is provided solely on a goodwill basis and does not relieve parties of their responsibility to verify the information from the relevant sources and/or seek appropriate advice from relevant professionals such as valuers, financial advisers, bankers and lawyers. For avoidance of doubt, ERA Realty Network and its salesperson accepts no responsibility for the accuracy, reliability and/or completeness of the information provided. Copyright in this publication is owned by ERA and this publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. 

Older flats, once considered less desirable due to their age, have gradually become more prominent in the resale market. If you are thinking of buying one, beware of hidden costs like maintenance and repairs that could catch you by surprise.

In recent years, we’ve witnessed an interesting shift in the HDB resale market in recent years—an increasing number of homeowners are turning their attention to older flats, specifically those that are at least 40 years old.

Rising Proportion of Older Flats Resold

One look at HDB resale transactions from 2021 will show a significant uptick in older flats resold. In the 1H 2021, 2,266 older flats were transacted, a figure that has since surged to 3,150 units in 1H 2024. In 3Q 2024, 1,817 older flats were transacted.

Proportionally, older flats made up about 17% of resale transactions in 2021. However, this proportion has since rose to 22.8% in 1H 2024, and 24.7% in 3Q 2024.

Chart 1: HDB Flats Resold by Age

Source: data.gov.sg as at 26 Sept 2024, ERA Research and Market Intelligence

Older Flats Are Commonly Found in Popular HDB Towns

The majority of older flats are predominantly found in HDB towns established since the 1970s. Consequently, it’s not surprising to see towns such as Bedok, Ang Mo Kio, Toa Payoh, Bukit Merah, Jurong West, and Kallang/Whampoa reporting some of the highest volumes of older flats being resold. On top of which, many of these mentioned towns are heartlands favoured by Singaporeans.

These towns often have town centres which feature established amenities. Additionally, they often benefit from existing infrastructure such as MRT stations or bus networks. The culmination of these conveniences makes these estates attractive to homebuyers of all age groups and demographics.

Table 1: Towns With At Least 300 Older Flats Resold In the First Nine Months of 2024

Source: data.gov.sg as at 26 Sept 2024, ERA Research and Market Intelligence

A Growing Number of Older Flats

As of 2024, Singapore has approximately 335,000 older flats that are 3-room and larger. Considering the total of 1.13 million HDB flats today, these older flats account for roughly a third of this figure.

But by 2030, the number of older flats is projected to increase to 502,000 units, making up a whopping 40% of the overall HDB flat inventory!

The number of older flats is expected to rise further over the long term. Even the government has previously cautioned home buyers in 2017, not to assume that all old HDB flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (SERS).

SERS is an exercise where old HDBs are acquired by the government and redeveloped to make better land use in modern land-scarce Singapore.

Following strict valuation principles, older flats should be priced more affordably with their shorter lease. This makes economic sense, and can benefit buyers who do not need the full 99-year lease. But this may not be the case for the Singapore’s buoyant housing market.

Older Flats May Not Necessarily Translate to Cheaper Homes, but Can Be Considerably More Affordable Compared to Newer Flats within the same Town

The price disparity between newer and older flats varies across towns. However, if you’re determined to stay in a particular town and have a smaller budget, older flats may be your best option.

By studying HDB transactions in 1H 2024, we can see the wide price disparity between older and newer flats in each township. Popular towns in the city fringe such as in Toa Payoh and the Central Area saw newer 4-room flats being resold at nearly double the price of older flats.

Conversely, towns such as Yishun and Hougang measured a narrower price gap between newer and older flats.

Table 2: Median Price of Flats Sold in Jan – Sep 2024

Source: data.gov.sg as at 26 Sep 2024, ERA Research and Market Intelligence *Only towns with transactions for both older and newer flats in Jan-Sep 2024 were included.

Who Are Buying These Older Flats?

The buyers of older flats come from diverse backgrounds, but they share a common reason for purchasing their older flats. And that is to buy an affordable home in their preferred heartland.

But if we were to further break them down by housing needs, we observe five key buyer profiles in the market:

1. Younger Buyers Staying Close to Parents: Many younger buyers are opting for older flats in established estates to stay close to their parents, to care for their elderly parents and to take advantage of the support systems.
2. Familiarity and Comfort: Some younger buyers, having grown up in these estates, are familiar with the area valuing the sense of community and continuity.
3. Right-Sizing Older Buyers: Older homeowners looking to downsize often choose to stay within the same neighbourhoods, where they have established roots and are familiar with the amenities.
4. Amenities Appreciation: Buyers are drawn to the well-developed amenities available in older, more established estates, which often surpass those in newer neighbourhoods.
5. Spaciousness: Older flats are known for their larger floor areas compared to newer developments, a feature that many buyers appreciate, especially in a work-from-home era.

Here Are Some Important Aspects of Older Flats to Consider

Shorter Physical Lease

Assuming older flats are at least 40 years old, they could offer owners up to another 59 years of residency. The shorter remaining lease may be a concern for young families, especially if they plan to stay long-term and their flat’s lease runs out.

And if one hopes to strike the jackpot with SERS, the odds could be slim as the government is unlikely to put all older homes under SERS.

Mortgage

Unless you are planning to pay for your flat in full, most Singaporeans will require a mortgage loan and the use of their CPF funds. But to leverage on that, the remaining lease of the flat and the age of the buyers will be critical considerations.

In the case when the remaining lease of the flat can cover the youngest buyer to the 95 years, these buyers will typically be allowed:

• To withdraw their CPF funds to the valuation limit if the remaining lease is more than 20 years,
• And granted a Loan-to-Value (LTV) limit 90% and loan tenure of 25 years or shorter.

But the complexity arises if remaining lease of the flat is unable to cover the youngest buyer to the 95 years. Under such scenarios, the valuation, LTV limit and loan tenure will be pro-rated accordingly.

That said, other factors such as your credit rating, outstanding debt (car, education loans) that can affect the mortgage terms. Therefore, it is important to check in with your bankers for clarity!

Physical state of the flat could require extensive renovation

As these older flats were developed a long time ago, they tend to show signs of their age, or are fitted with older fixtures. Money might have to be spent to upkeep the flat and refresh it with modern features.

Of course, you could go for a newly renovated older flat – but they often come at a premium due to the renovation costs incurred by their previous owners.

Less conducive environment

Apart from the interior of the flat, buyers may have overlooked the environment which is essential to a pleasant living experience

For instance, the facades of older flats are subject to prolonged weather influences and are difficult to maintain. Next, designs of older flats are dated, so it is common to see things like narrower corridors or even slower lifts could also pose as daily challenges to residents.

As newcomers, new homeowners are expected to be more accommodating to their neighbours, who are likely long-term residents. And because of that, these long-term residents may feel entitled to extend their storage spaces into the common areas, resulting in clutter and encroaching to another neighbours’ space. In extreme cases, these could become fire hazards.