The government has recently announced the extension of the Central Business District Incentive (CBDI) and Strategic Development Incentive (SDI) schemes for another five years. These schemes were first introduced in November 2019 and the decision to extend them was announced by Desmond Lee, Minister of National Development (MND) at the Real Estate Developers’ Association of Singapore (Redas) annual Spring Festival lunch on Feb 7.
The main objective of the CBDI scheme is to encourage the conversion of older office buildings in certain areas of the Central Business District (CBD), namely Tanjong Pagar, Robinson Road, and Shenton Way, into mixed-use developments. This is in an effort to increase the number of homes, boost the residential population in the CBD, and introduce a greater diversity of uses in the traditionally commercial-centric district.
On the other hand, the SDI was introduced to encourage the redevelopment of older developments in key areas to catalyze transformative changes in the surrounding urban environment. These areas include Orchard Road, the Central Business District, and Marina Centre.
According to the Urban Redevelopment Authority (URA), out of the 17 CBDI proposals and 12 SDI proposals submitted, 14 and seven respectively have been granted in-principle approval. Currently, there are four CBDI projects under construction in the Anson-Tanjong Pagar area, such as Newport Plaza, a mixed-use development on 80 Anson Road which comprises of 246 residential units and 198 serviced apartment units. The Skywaters Residences, a larger mixed-use development on 8 Shenton Way, includes 190 luxury residential units. Other CBD projects include two commercial developments at 15 Hoe Chiang Road and 51 Anson Road.
The five-year extension of the CBDI and SDI comes with some refinements to both schemes, according to Minister Lee. One of these changes is the extension of the CBDI to commercial developments in Anson and Cecil, where developers and property owners who submit proposals for buildings in these areas will have the option to retain their commercial zoning, with 40% reserved for non-commercial use, if the redevelopment includes long-stay serviced apartments. In addition, CBDI applicants who wish to redevelop in Anson and Cecil will need to provide at least 200 residential units, or allocate their entire non-commercial floor area for long-stay serviced apartments, whichever is lower. Previously, office buildings redeveloped under the CBDI were allowed to keep their existing commercial zoning if 40% of the new floor area was set aside for non-commercial use.
In Singapore, having a good understanding of the rules and restrictions concerning property ownership is crucial for international investors. While foreigners have some leeway in purchasing condominiums, they face stricter regulations when it comes to buying landed properties. Additionally, all foreign buyers are required to pay the Additional Buyer’s Stamp Duty (ABSD) of 20% for their first property purchase. Despite this extra cost, the real estate market in Singapore continues to show strong and promising growth, making it an attractive destination for foreign investment. This is evident in the ongoing influx of foreign funds into various projects in Singapore, such as those listed on Singapore Projects.
As Marcus Chu, CEO of ERA Singapore puts it, “By enabling the continual renewal of the many aging buildings in the city centre, and with the injection of more residential units, these incentives aim to make the CBD a place to work, live and play.”
In addition, the revised CBDI and SDI schemes will also include new sustainability requirements, and from now on, all new CBDI and SDI applications must include a sustainability statement assessing the viability of retrofitting part, or all, of the existing building. Minister Lee emphasized the importance of revitalizing and rejuvenating through redevelopment, but also stressed the need to avoid wasteful demolition and excessive rebuilding, especially for relatively young or well-maintained buildings. He pointed to several projects that are already going above and beyond the mandated sustainability requirements, such as Union Square, a mixed-use development at Havelock Road that includes a district cooling system.