Wednesday, September 5, 2012

Grants inadequate for building underground links: analysts


SINGAPORE : The Urban Redevelopment Authority (URA) has doubled the grants for building underground walkways in downtown Singapore, like the Civic District, Central Business District and Orchard Road.

However, that may still not cover the entire cost of building underground links. 

While underground linkways in some prime shopping belts enjoy attractive rentals, analysts told MediaCorp that incorporating retail units in underground links may not be feasible for all developments, given regulatory constraints and high maintenance costs. 

Savills Singapore estimates the cheapest way to build underground links would cost some S$22,000 per square metre, but the maximum grant for building on private land is almost less than half of this. The government would reimburse up to S$28,700 per square metre of the cost of building these walkways under state land - more than double the previous amount.

The cross junction between North Bridge Road and Coleman street is often busy. 

A solution would be underground links beneath the surrounding buildings to City Hall MRT station. 

More links have been proposed in a recent URA circular revising its incentive schemes. 

This is to encourage developers to build more links in downtown Singapore, especially at Orchard Road where most of the underground links are proposed.

The link between Tangs Plaza and Shaw House is one of the two existing links in Orchard Road marked for upgrading. And should URA's plan to fully develop another 12 links in Orchard Road be fully realised, shoppers can actually stroll underground all the way from Forum The Shopping Mall to the other end of the premium shopping belt at Orchard Building. 

Ku Swee Yong, CEO of of International Property Advisor, said: "Existing linkways are actually very profitable...for the landlords who have underground links. Look at the heavy stretch of Ngee Ann City, Wisma Atria, leading to Ion Orchard. In basement one, rentals can be very strong because of that flow through of traffic." 

But developers and mall operators have been cool to the programme since it was introduced in 2004. Out of the eight links proposed then, none were built.

Some analysts said not all underground passes enjoy heavy traffic. 

Besides cost of construction, building shops in underground links above private land would also incur development charges. 

Maintenance cost is also an issue. 

Alan Cheong, research head at Savills Singapore, said: "(It is) feasible only if you can put in the retail F&B component and the grants. But again, how much space you can lease out - that would also be quite critical. If it is a small space, the added cost and the disruption cost to your existing tenants may act as a demotivating factor for developers not to go ahead with it."

Besides the incentive programme, some newer malls on sites sold under the Government Land Sales programme are also required to build underground links.

  
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