About 30 years ago, if you bought property in Jurong, people were not sure whether to laugh at you or send you their condolences. 1980s Jurong was more underdeveloped than a 13 year-old’s Tumblr poetry, and 90 per cent of it was smog, industrial grade machinery, and overloaded trucks.
Then there was Paya Lebar. No one really remembers what it was like 30 years ago. In fact, Paya Lebar was so boring for so long, it’s possible the Singapore government was caught entirely by surprise when they looked at a map and realised it existed. I think that right up till the ‘90s, the most exciting recreational activity in Paya Lebar was measuring nose hairs, and seeing which one grew the longest before you died of old age.
My point is, both places were invisible on the property radar. Then came the business hub plans.
Moving out of the CBD
The Urban Redevelopment Authority (URA) has a master plan for Singapore. You can see this in their building near the Maxwell Road coffee shop, and it’s the blueprint for property investing.
The master plan indicates how each area is going to be developed. We know, for example, that Lim Chu Kang will be an agricultural area with goats and vegetables and whatnot. Right now the place is known for its giant cemetery, so you just know there’s great fertiliser there*.
(*Not URA’s official reason)
The two interesting hotspots, under this master plan, are Jurong and Paya Lebar. These are slated to be alternative “hubs” to the Central Business District (CBD). The idea is that, by having decentralised business areas, office workers won’t need Mixed Martial Arts skills just to get a seat on the morning train – it solves the infrastructure issue of everyone rushing in and out of the CBD at the same time.
But the question is, which of these two business hubs allows better investment opportunities?
Jurong will be the biggest business hub outside of the CBD, providing around 500,000 square feet of office space. It will have half as much in the way of entertainment and F&B outlets. 1,000 new residential units will be built within walking distance of the Jurong East MRT, and the adjoining Jurong Lake project will beautify the view (in the past, the “view” in Jurong was usually a bird asphyxiating to death from industrial pollutants. Maybe that’s why their team in the S-League all play like they have asthma.)
I looked up the prices of J Gateway, one of the more prominent condos in the area. This can be taken as a good overall indicator of prices. In 2013, the average price was around $1,537.50 per square foot (going by URA transaction records). At present, listings for J Gateway on 99.co, expected to TOP next year, is going for an average of $1,859 per square foot, an overall gain of 20.9 per cent.
Impressive, given the current property market goes down more often than a part-time boxer.
Jurong has the following going for it:
- The High Speed Rail terminus
- The Jurong Innovation District
- Proximity to research hubs and tertiary education institutions
- Cluster of high profile malls
1. The High Speed Tail Terminus
On 11th May 2015, it was announced that Jurong East would house the terminus for the High Speed Rail (HSR). This is slated to be finished in 2020.
The HSR is significant, because about 350,000 Malaysians work in Singapore. They would want to rent somewhere in the area of the HSR terminus once it’s up, as it will make trips back home easier.
The HSR could also see rising rental demand in commercial and entertainment spaces, just from the increased foot traffic.
2. The Jurong Innovation District
The Jurong Innovation District was announced during Budget 2016. This will be a next-generation tech park, which caters to aspects like Research & Development as well as manufacturing. Proximity to nearby Universities and research hubs means collaboration will be easier, thus encouraging innovative new breakthroughs (you may recognise this as the prelude to 90 per cent of all science-fiction disaster movies.)
Slated for completion in 2022, the Jurong Innovation District could drive up rental demand in the area. Prospective landlords should be prepared to take action much sooner – remember that the HSR will already be complete by then, potentially driving up prices already.
3. Proximity to research hubs and tertiary education institutions
Jurong Gateway is close to institutions like Nanyang Technological University, and the University of Singapore. While these institutions do have dorms for foreign students, competition for them is often tight.
It is especially difficult for Singaporean students who live in the east, but need to commute to class – preference is often given to foreign students, who have more urgent need for living arrangements.
Landlords who care to make a buck out of renting to students (i.e. the ones without anger management or blood pressure issues) should look at this area.
4. Cluster of high profile malls
JEM, Westgate Mall, and IMM are major shopping hubs. The close proximity entices tenants. For owner-occupiers, it means having the major brands and eateries that you usually find in town (e.g. Uniqlo, Fish & Co.) right at your doorstep.
JCube, near the Jurong East MRT, has Singapore’s first Olympic size skating rink. Property investors should check it out – looking at our government’s cooling measures, it’s apparent they all enjoy skating on thin ice.
Paya Lebar has 12 hectares of land up for development. There’s room for some 500,000 square metres of commercial floor space, and the heart of it will be Paya Lebar Central (PLC.) PLC will be attached to the existing Paya Lebar MRT, and consist of three office blocks mixed with commercial spaces and possibly serviced apartments.
The SingPost Centre, right across from the same MRT station, is undergoing a $150 million renovation. Once complete, it will be the largest e-commerce mall in Asia. And yes, I too thought the whole point of e-commerce was that you didn’t have to go to a store, but apparently mixing physical stores and online stores has some kind of purpose (don’t ask me, this isn’t retailexpert.com.)
A lot of the spotlight has been stolen from Paya Lebar, because of continued announcements about Jurong. But that could mean there are a few undervalued gems here for investors.
Prices for properties around Paya Lebar Road, such as Le Crescendo, ranged from $1,200 to $1,400 per square foot in 2013. Currently, the only available listing that’s within range of PLC is Paya Lebar Residences, which is going for around $1,181 per square foot. Prices have remained relatively flat in this area, since 2013. That could represent an opportunity for investors.
Paya Lebar has the following going for it:
- Close proximity to the real CBD and the airport
- Proximity to Tanjong Katong Road and Sims Avenue
- Paya Lebar Central
1. Close proximity to the real CBD and the airport
Paya Lebar is just 10 to 15 minutes from the CBD and Changi Airport, a fact that sets it apart from Jurong. Prospective landlords can look forward to spill over from the CBD, as companies unable or unwilling to cope with higher rentals there compromise by moving towards Paya Lebar.
To be honest, office spaces in Paya Lebar have not done well lately. Paya Lebar Square, which was quickly sold out when first announced, is now half-empty. But business could pick up dramatically once PLC is up and running.
2. Proximity to Tanjong Katong Road and Sims Avenue
This is of interest to prospective tenants, because Tanjong Katong and Sims Avenue have some of the best eateries. They are also becoming vibrant areas, with the wave of hipster cafes moving in (sometimes the food even matches the price.)
For owner-occupiers, it allows access to amenities that are seldom as overcrowded as places like Queenstown, or town itself (the Orchard area.)
3. Paya Lebar Central
Paya Lebar Central will be a deciding factor in the business hub project. Once it’s built, it will pull tenants who work – and hence will want to live – in the area. PLC is being jointly developed by a sovereign fund from Abu Dhabi, and Aussie developer LendLease (already established through Parkway Parade and Orchard Central.)
This will make Paya Lebar considerably less boring in the near future.
Most of the goodies in Jurong will be done in 2020 or beyond. A lot can happen in that time. Paya Lebar Business Hub however, is slated to be complete this year(although some of the big developments in PLC may take till 2018.)
This means investors can consider a quicker pay-off, and we can already see some of the work being done near the MRT station. Investors who don’t trust plans five or more years down the road should look here instead.
Jurong is definitely the more dramatic of the two. But that being said, Paya Lebar’s been a little too ignored – and that often means opportunity. It is also possible that Jurong will become the victim of its own hype; with so much fanfare going on, it’s possible that prices more than factored in the coming HSR and innovation district.
Don’t be too quick to dismiss Paya Lebar, and keep a close eye on prices here.