Eye on Woodlands: Northern Growth Corridor

Does Woodlands Regional Centre have what it takes to thrive?

A few weeks ago, a prime commercial site attracted strong interest from developers. A consortium of Far East Organization, Far East Orchard and Sekisui House put in the highest bid of nearly $634 million or $907 psf ppr for the first commercial site put up for public tender since the announcement of the regional centre as Singapore's Northern Gateway.

Demand was strong with eight bids, which included some big name developers. The highest bid was also substantially higher than what the first development site at Jurong Regional Centre fetched in June 2010. The white site slated for commercial/residential/hotel use was contested by six parties then and the top bid was logged by Lend Lease at $749 million or $650 psf ppr.

Developers' interest in this site is a testament to the confidence in the upcoming Woodlands Regional Centre, which is in close proximity to Malaysia's special economic zone – the Iskandar region. The growth momentum in Iskandar was also rekindled with the announcements made by both Prime Ministers after their annual retreat. Three possible locations for the Singapore-KL High Speed Rail (HSR) station have been identified and the Woodlands-Johor Bahru Rapid Transit System (RTS) is also on track to be completed by 2018.

So what does this spell out for Woodlands Regional Centre? Does it have what it takes to be in the ranks of Jurong and Tampines Regional Centre which have undergone successful transformations?

Envisioned as Singapore's Northern Gateway, Woodlands Regional Centre will incorporate retail, business, residential and lifestyle elements into its two districts – Woodlands Central and Woodlands North Coast.

Even though the retail scene in Woodlands is not likely to match what Jurong can offer in the foreseeable future, Woodlands Regional Centre has its own unique selling points.

Firstly, Woodlands Regional Centre is the only regional centre with a coastal waterfront setting. Residents in Woodlands can look forward to the stunning views of the Straits of Johor, something that only the residents in Marina Bay and Sentosa Cove can enjoy at the moment.

According to URA's Draft Master Plan 2013, the existing Woodlands Waterfront will be expanded eastwards so that the entire waterfront area can be opened for the public to enjoy. New and sensitively designed residential developments will be built along the expanded waterfront park.
Shipyard facilities located in Sembawang will also be relocated to create more waterfront sites.

Secondly, job creation will be full speed ahead for Woodlands Regional Centre it seems. Currently, our major employment centres are located far from the north, and there is high travel demand towards the city and the west during peak hours. This is set to change. With the unveiling of the Land Use Plan early last year, one important commercial belt called the North Coast Innovation Corridor spanning across Woodlands, Sembawang, Seletar, Punggol and Sengkang West is expected to see a buzzing pool of research and development activities that could attract more diverse economic clusters.

Companies looking to have operations in Iskandar could also take advantage of the improved connectivity between Woodlands-Johor and Woodlands-city with the development of the upcoming Thomson MRT line and North-South Expressway. When fully developed, this regional centre will provide an additional 100,000 jobs, boosting demand for housing.

IMPACT ON PROPERTY PRICES

In the past five years, the government has launched two private and three Executive Condominium (EC) land parcels for tender in Woodlands. That will inject about 2,700 new homes in Woodlands. If the total uncompleted pipeline supply of 97,742 units is of any indication, the supply in Woodlands is merely 2.8 percent of the total stock. Despite the increased supply, more housing supply is probably needed to support the growth in jobs.

Currently, potential tenants do not have many choices when it comes to renting a completed private home in Woodlands. Supply of condominiums in Woodlands is limited, as only five projects have been completed in the area over the last decade or so. Out of the five, three projects were completed more than a decade ago. Some tenants have to resort to renting apartments and condominiums in nearby housing estates such as Yishun and Sembawang while working in the industrial parks in Woodlands.

In 2013, rental yields of District 25 (Woodlands) and 27 (Yishun and Sembawang) stood at 4.0 percent and 4.2 percent respectively, both outperforming the islandwide average of 3.8 percent.

In contrast, private home prices in Woodlands have been largely underperforming the Outside Central Region (OCR) for all types of sales. The mismatch of capital value and yield could potentially bring about further capital appreciation in home prices in the regional centre, though volatility is expected over the next four years amid record completed units islandwide in both the private and public segments.

In addition, a possible rise in interest rates could also put a damper on price growth in the imminent future. Nevertheless, vibrant commercial activities and job opportunities will increase the popularity of the housing estate over the medium to long term. Since the unveiling of the Master Plan 2008, property prices in Jurong have been keeping up pace with the development in the area. Prices of non-landed private homes in Jurong grew by 64 percent since Q1 2008, outperforming the 58.5 percent growth in OCR homes.

Home buyers and investors need not wait too long for it to happen to Woodlands as long as Singapore continues to progress economically and stay on its decentralisation course to enable more Singaporeans to live near their workplaces.

Christine Li is Head of Research and Consultancy at property firm OrangeTee.



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Eye on Jurong: New Western Frontier

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