As Singapore celebrates its 40th birthday, the city-state has realised that it needs new growth strategies and innovative ways to draw in FDI and foreign talent to keep economic pace with its neighbours – not to mention the tiger economies of South Korea, Taiwan, Hong Kong and the twin economic giants, China and India.

Reinventing itself


Singapore is currently experiencing economic growth rates of 5.0%-6.5 % – a far cry from the double-digit growth rates of the past. Its unemployment rate last year hit an all-time high of more than 4%. While unemployment rates have dipped this year, inflation rates have been kept low and interest rates have declined, yet the city-state is aware it must reinvent itself and rebrand Singapore Inc in order to stay competitive.

Late last year, Jones Lang LaSalle’s City Governance Survey of 33 cities worldwide assessed the quality of city management based on five key measures – physical integrity, autonomy, stability, efficiency and effectiveness – and two measures relating to city marketing. Singapore came out as the best managed city, clinching the number-one spot over Auckland, Dubai and Barcelona. However, in terms of city marketing it only managed fourth place after New York, Shanghai and Barcelona. The survey showed that good city management combined with savvy marketing has the ability to influence the overall competitive position of a city in the global hierarchy.

The right name

Singapore’s solution to the rebranding question is to reinvent its urban landscape. The concept has been dubbed the ‘Big Bang’ among property developers in the Asian region. City officials spent about $400,000 on a branding exercise to create a winning strategy for the mega-project. They decided in the end to retain the existing name, which they hope will make an impression on Singaporeans and foreigners alike: Marina Bay.

Marina Bay is designed to be a waterfront city in a garden, making it a place for work and play for a population of almost 40,000 inhabitants. So far, the project has attracted about S$4.5bn ($2.7bn) in investments and estimated investments are snowballing to roughly US$7bn, according to Jones Lang Lasalle. That includes facelifts made to Orchard Road in the city centre.

Attracting investors

The government has tasked the Urban Redevelopment Authority (URA) with being the project’s place manager, co-ordinating infrastructure development, promoting the Bay area internationally and attracting potential investors.

The Marina Bay concept was not hatched overnight; the area is land that was reclaimed 10 years ago. Cheong Koon Hean, chief executive officer of the URA, explains that the concept has been in the works by the URA for several years, as there was a clear need to provide a new area for development in anticipation of future growth.

“Being Singapore, we plan way ahead for the city to grow. We realised that as time goes on, we cannot have just another Shenton Way or commercial business district,” says Mrs Cheong. “We needed a total lifestyle product that will translate into a dynamic relationship between the person staying in the Marina Bay and the environment. This total lifestyle experience is going to be unique, which in turn will bring life to the city.”

For a country obsessed with meticulously planning its national infrastructure and micro-managing land (its prized national resource), according to national development minister Mah Bow Tan, the Marina Bay project is seen as a “strategic development”. It will be Singapore’s answer to the increasing competition from cities such as New York, London, Dubai, Shanghai and Hong Kong for the global pool of investment, talent and jobs. It will also help differentiate Singapore from other major cities.

“Our vision for Marina Bay is that of a 24/7 live-work-play environment that epitomises the global city we envisage Singapore to be,” says Mr Mah. “It is to be a place for thriving business, gracious living and endless entertainment, as well as a place of creativity, arts and culture, architectural excellence, world-class recreation, global commerce and modern city life rolled into one.”

The central theme of the Marina Bay is centred around the three Es: explore, exchange and entertain. Singapore has realised, like most cities, that great buildings are not enough to create a successful city.

Welcoming design

“Place management is not just about the hardware but the software as well,” says Mrs Cheong. This includes understanding how people feel about the design of these areas – for example, public spaces should be “very welcoming and friendly, be it for business or for family”. Another aspect is planned activities, for example, the F1 Powerboat racing, which is being hosted at the Bay this year. “It will attract thousands to the Bay area as well as being broadcast globally,” says Mrs Cheong.

However, what is most important about the Marina Bay development, she says, is the prospect of creating an iconic “signature” for the city-state. “For the US, it is New York’s Times Square, while for Australia, it is Sydney’s Harbour Bridge,” she says. “Finding that for Singapore is not something done overnight. It takes time to build up the image of the place, the understanding of the place and for people to endear to a place.

“Over time we should build up our own skyline that is well recognised internationally.”

World class facilities

The Marina Bay project will be built in phases over a 10-15 year period. It will house world-class facilities such as the Business and Financial Centre (BFC), an integrated resort with casino, a second Botanic Gardens and the Marina Barrage. It will also include prime residential buildings (work has already commenced at The Sail@Marina Bay), and office buildings at One Raffles Quay.

A state-of-the-art, comprehensive infrastructure will be in place to support the rapid development of the city centre. In addition to S$1.49bn already set aside for infrastructure work, the URA intends to spend up to S$300m for further infrastructure development, such as a common services tunnel (CST), which will house electricity, cooling water and telecommunications for the entire area.

Singapore is the first country in south-east Asia to build a CST supporting a waterfront city. According to Mrs Cheong, the CST provides good reliability and makes it easier for utility companies to upgrade infrastructure without digging up the roads. The URA also intends to bring in power utilities and three new mass rapid transit lines, making it a highly accessible area.

“More importantly, we aim to do up a wonderful waterfront promenade and a bridge that will link the Marina South area with the Marina Centre area and the convention centre,” she explains. The city itself is growing in two prongs: one goes from the existing Raffles place down to the CBD area, and the other area extends from the Marina Centre toward the integrated resort. That would frame the bay area.

“The Marina Bay area is much larger in scope and is seen as a link in extending the CBD area. We see it as a natural extension and seamless integration of the existing city with the new city,” says Mrs Cheong. “Our intention is to make it a waterfront city within a garden.”

The government recently awarded the 3.55 hectare BFC ‘white site’ to a consortium including Singapore’s Keppel Land, and Hong Kong’s Cheung Kong Holding and HongKong Land. The attractive price it fetched is seen as a strong indication of interest in future grade A commercial prime land where prices in the past have been less than awe-inspiring.

Improving sentiment

According to Rob Garman, head of commercial property, south Asia, at HongKong Land, the BFC site is considered one of the more promising development sites in Asia. “We believe there will be significant demand for bespoke buildings that cater for financial institutions,” he says.

“Market sentiment has improved over the past 12 months and we expect this to continue over the next five to 10 years. Our experience with One Raffles Quay reinforces this position; there we have seen a significant upturn in demand for premium-grade office space.”

The consortium, which has already bagged One Raffles Quay, will be seen as a dominant player in the premium-grade office sector. “HongKong Land's own strategy has been to increase its presence in the Singapore office market to build a portfolio that replicates the position enjoyed in central Hong Kong,” says Mr Garman.

With a strong reputation for developing premium-grade office space, the consortium has secured three leading banks, UBS, Deutsche Bank and ABN AMRO, as anchor tenants. There are already preliminary discussions going on with a number of local and international financial institutions about relocating to the BFC, Mr Garman reports.

Obsolescence fear

According to Yu Lai Boon, managing director for property consultants Jones Lang Lasalle, developers fear functional obsolescence, which is part of the downside risk of investing in office space.

“The BFC is coming up with office space that would compete with the office space found in the older city. This would create a knock-on effect, whereby it would prompt the older land lots to be redeveloped in terms of functional rental rates,” Dr Yu says. “To remain competitive, they in turn would have to charge a lower rent compared with the old rates they were charging. Competition in this case would benefit the tenants and create better allocation of limited land resources.”

The Singapore property market has had its fair share of ups and downs in the past. Finding the right equilibrium pricing is dependent upon several market factors besides demand. One seasoned observer, Ace Mahendran, managing director of Ace Real Estate Pte Ltd, says real estate investments are not making as good a return as they used to since the downturn of the property market. This was brought about by the Asian financial crisis, the threat of terrorism and a spate of computer virus attacks from neighbouring countries.

“What Singapore can offer is better security and, hopefully, a higher level of service in the service industry so that has to be our selling point. Anything else can be provided by almost anyone else in the region,” says Mr Mahendran.

According to a recent property report by CB Richard Ellis, sentiment in the Singapore property investment sales market has remained positive in the second quarter of this year. A healthy level of liquidity and the relatively low cost of funds are two of the factors that have sustained buying momentum in 2005. CB Richard Ellis reported that a total of S$1.72bn of investment sales were recorded in the quarter to June, 13.8% higher than that in the previous quarter.

The report also revealed that the current low interest rate environment remains favourable to the investment market and that institutional investors will continue to scout for yield-accretive investment properties. With limited upward pressure on cap rates (property yields), the overall verdict remains bullish and the outlook for the investment market remains positive. With several attractive government land sales taking place in the second half of the year, there is a high probability that total investment sales for 2005 could exceed last year’s S$7.66bn.

Towering design

Besides the turning of the tide in the investment grade properties, another project that deserves mention in the Marina Bay is a landmark waterfront residential property being developed by City Developments and AIG. Called The Sail@Marina Bay, it will include the tallest residential tower ever built in Singapore (it would also be the world’s 10th tallest).

The design is by internationally acclaimed architect Peter Pran. A total of 1111 units will be shared between two towers. The first of the towers is due to be offered to foreigners and Singaporeans in mid-October.

Jones Lang Lasalle’s Dr Yu says that the unique selling proposition of The Sail@Marina Bay is that it is located in the heart of the central business district of the greater Marina Bay area. “Never before has a prime residential estate been built at the heart of the central business district,” he says.

Despite the slight increase in prices for prime residential estates, Dr Yu is cautiously optimistic in predicting the recovery of residential prices overall. “Although the government policy has created more excitement recently, there has not been a substantial increase in prices,” he says.

Dr Yu does not expect that rents will revert to the levels of the mid-1990s, when they were as high as S$10 per square feet. “On a plus point, the external shocks have not rocked prices, as overall property prices are seen to be at the bottom of the property cycle,” he says. The market is more stable and, with the strong uptake of the BFC, it has sparked some renewed optimism among property developers and signalled the end of the down cycle.

Private investors

Mrs Cheong says the private sector is critical to the development of Marina Bay. “The URA by itself cannot make things happen. We need the private sector to participate and work with us to make this dream a reality,” she stresses.

“Our role as government is to facilitate [it] by providing the infrastructure and quality environment. The private sector then brings their vision, creativeness, innovation and investments.”

Singapore has been given the thumbs up by private investors and foreign investors, many of which have decided to relocate their operations to the city-state. According to HongKong Land’s Mr Garman, Singapore is renowned for its excellent infrastructure, transparency and legal framework.

“These are the key reasons why we have seen significant interest from foreign investors wishing to enter Singapore’s property market,” he says. “Investors have also been attracted by the development of Singapore’s real estate investment trusts market, which has evolved over the past four years. And the Singapore government has played an important role in providing a sound legislative framework.”

Most competitive

According to a 2005 World Competitiveness Report by the IMD, a non-profit institute in Switzerland, Singapore scored 89.7 points out of 100 and was ranked as one of the top three most competitive countries out of 60 countries, next to the US and Hong Kong.

However, Singapore is far from complacent. The city-state’s closest rival is Dubai’s Festival City, which is dubbed a city-within-a-city. Dubai is fast evolving as a strategic oasis in the Middle East. Festival City will be built on 1600 acres with 15 distinct development zones. Its Waterfront development – a sprawling retail, dining and entertainment city within the Festival City – will be a serious contender for tourist traffic, something that cannot be underestimated even by the likes of Singapore.