Speak about the Marina Bay area, and some of the most common talking points are its high entry cost, and lack of amenities. However, here are my reasons why I feel that this will all change in the coming few years when real estate developers take notice of these land plots.
History
The Marina Bay Area might seem to be a very new concept to Singapore, but do you know that land reclamation was already done in the area as early as 1969? This was in view to serve the growing needs of Singaporeans. A total of 3.6 square kilometers was reclaimed.
As early as the 1980s, the Urban Redevelopment Authority (URA) detailed their vision of the Marina Bay area, where waterfront areas are kept for public use. In 1988, this was elaborated on to the public with an exhibition. The Singapore waterfront will be lined with many notable landmarks, which will form part of the Singapore skyline.
This was realized with landmarks such as the Marina Bay Sands, Gardens by the Bay, The Promontory @ Marina Bay, The Float @ Marina Bay, and many other notable areas. The Fullerton Hotel, which has been gazetted as a national monument, also line the waterfront.
White Sites
The success of the Marina Bay Area heavily depends on Marina Bay residents weaving a strong social fabric within the area. This meant that Marina Bay should not heavily emphasize a particular use.
Let me elaborate.
The main challenge of the “old” Central Business District (CBD), which lies west of Marina Bay, is that this zone is heavily focused on commercial offices. Without strong residential/recreational premises, the area typically becomes less utilized. This can be seen during the “COVID-19” pandemic, with people working from home.
In layman's terms, white sites mean that the URA has not specifically demarcated any land zoning for this area. This means that there is good mobility for urban space planning and changes can be made quickly.
Below are the accepted uses for White Sites' land use.
Below are the accepted uses for White Sites' land use.
Residential
Office
Shop
Hotel
Serviced Apartments
Recreation Club
Association
Convention/Exhibition Centre
Entertainment
These acceptable uses will allow the URA to not heavily emphasize any particular use which might be detrimental to a vibrant Marina Bay. Also, grade A office use is still allowed as they are essential to Singapore’s growth as a financial center.
To see the effects of white sites on the surrounding real estate, let us take for example at Duo Residences. It is a mixed development, comprising of residential, commercial and office space.
This current white site located beside Rochor Road is Duo Residences. It is flanked by the Arab street shophouses to its east, The Gateway to its south, and the Midtown Modern plot to its west. I have written a review on its land plot recently, and you can read more here.
Taking a look at the sales transaction, you might notice that Duo Residences took a hit in regards to transacted price in 2020. This was due to the COVID-19 epidemic. Another contributing factor will be the sudden increase in the supply of new launches, such as The M Condo.
The M took up an astounding 400 units of transacted volume, and its sales might have detracted the value from Duo Residences.
Taking a closer look between 2013 to 2019 however, you will realize that Duo Residences have amazing resiliency in terms of price. The wave of Additional Buyer Stamp Duties (ABSD) revision had little impact on its prices.
This shows that residential white sites perform no different from the usual residential sites should the fundamentals supporting the buyers' purchase are strong. (i.e., Good Supply/Demand ratio, amenities, transportation, etc.)
However, white sites also cause ambiguity in price performance. real estate prices can fall drastically if surrounding site use is not beneficial.
I believe this is a strong point of consideration for the URA, seeing that land is a limited resource. To spend hundreds of millions on land reclamation, utilities set up and transportation, only for real estate prices to head into a downwards spiral is bad business sense.
Marina One Residences
Let us draw focus to another white site, Marina One Residences.
I have previously written a review of Marina One Residences. In summary, I feel that Marina One Residences makes for a good purchase due to it being in a pilot project of the Business Improvement District (BID). This means that privatized companies have a stake in ensuring that the overall area maintains its vibrancy, and they are renumerated according to their performance.
Speaking of vibrancy, it means how lively the Marina Bay area is in regards to activities being conducted within an area. Being too focused on a particular land zoning within an area might result in high productivity in that use segment, i.e. think office use, but what if most recreational activities are located outside of this vicinity?
Vibrancy also allows for stronger rental performance, which translated to resilient real estate prices.
Other advantages include its excellent connectivity as it is close to four MRT stations from different lines and its low maintenance fees.
However, its setback is its initial high asking price and additional costs for carpark lots.
Purchases like these generally have the most reward vs risk. Seeing that at this moment there are not many developments around Marina One Residences, it will take an investor with steely guts to look into this purchase.
Comparing the sales transaction trend of Marina One Residences with Duo Residences, you will find that it is remarkable that the ABSD remission from 2014 till 2019 had little impact on prices.
In my opinion, I feel that even though prices for Marina One Residences have dipped slightly, they still held up pretty well albeit in our present tumultuous times.
Attractions
There’s a good reason why Singapore has experienced strong year-on-year (y-o-y) growth, except for 2020. In 2019, international visitor arrivals have reached a record high of 19.11 million! Despite being a small country, it is fifth out of 162 cities in terms of the most visit global destination by tourist arrivals from Mastercard Global Destination Cities Index from 2008.
Marina Bay is generally geared towards tourism with its exhaustive list of attractions, but this does not mean that the locals can’t be enjoying them either!
This list from hotels.com generally describes the 16 Best Things to Do in the Marina Bay area. Of course, there are more amenities outside the Marina Bay area. I believe that these attractions will further emphasize how vibrant the Marina Bay area is, which will translate to strong future prices.
Conclusion
The Marina Bay area is primed with potential as its status as a tourist hotspot brings about interest within the area itself from foreign travelers who might be keen on purchasing a Singapore home. This can be highly profitable for local investors also, as its proximity to Singapore’s financial district can provide good rental opportunities.
However, not many residential developments are being done within the Marina Bay area. It will take investors with confidence in the URA’s promises to place their money in.
The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer, organization, committee, or other group or individual. The author does not accept any responsibility whatsoever for any harm or loss arising from accessing or relying on information contained in this blog post.