Far East Organization — first mover in Woodlands Regional Centre

/ The Edge Property |

August 26, 2016 9:30 AM SGT

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A consortium led by Far East Organization (FEO) has sold about half of the 124 strata offices released at Woods Square in private previews since end-July. Woods Square is the first mixed-use commercial development with strata offices for sale in Woodlands Central.

When completed at end-2021, Woods Square will be linked to the neighbouring Woodlands Civic Centre and Causeway Point shopping mall and the Woodlands MRT station. The commercial project comprises two office towers, a pair of SOLO (small office, loft office) blocks and a retail podium with 39 shops and a 5,000 sq ft childcare centre. The entire project has a total gross floor area of 700,000 sq ft.

Tower 1 has 16 floors and houses 365 strata offices for sale. A key feature of these strata offices, which measure 549 to 5,339 sq ft, is their ceiling height of 4.2m. Most of the units released for sale are from this tower.

Showflat of a typical office at a Woods Square unit with 4.2m ceiling height

Showflat of a 500 sq ft SOLO unit with 5m ceiling height

The 12-storey Tower 2 features large floor plates of 23,000 sq ft, and will be available only for lease. The tower has already secured its first anchor tenant — FEO, which will be relocating its satellite offices from across Singapore to Woods Square when the mixed-use commercial project is completed. FEO will occupy 70,000 sq ft spanning 3½ floors of Tower 2.

“It demonstrates confidence in both the location and project,” says Shaw Lay See, FEO’s chief operating officer for the property sales business group. The company will maintain its headquarters at Far East Plaza on Scotts Road, a mixed-use development built in 1983 by the group’s founder, the late Ng Teng Fong.

The fourth floor of Tower 2 will have shared amenities for office users, such as meeting and conference rooms, an auditorium, a gym and swimming pool.

Meanwhile, the two SOLO blocks at Woods Square comprise a total of 101 units measuring 495 to 1,808 sq ft: SOLO 1 has 49 units and SOLO 2 has 52. The main attraction of the SOLOs is that they have a 5m ceiling height and come with a built-in raised platform. Part of SOLO 1 has been released. FEO will be holding the retail units for lease so that it can better manage the tenant mix. It will also engage a reputable operator for the childcare centre.

Designed by DP Architects, Woods Square occupies two adjacent sites with a total land area of 199,873 sq ft. The sites were purchased by a joint venture between the privately held FEO, its listed entity Far East Orchard and Japanese developer Sekisui House when they won the government land tender with a top bid of $634 million, or $906 psf per plot ratio (psf ppr) in April 2014.

The partners have also received approval from the government to offer strata offices for sale. Prices range from $1,700 to $2,300 psf, or start from $970,000 for a 506 sq ft unit. Shaw says the prices of offices sold at Woods Square averaged $1,800 psf, with SOLO units at an average of $1,950 psf.

Woods Square is the first mixed-use commercial development in Woodlands Central offering strata and loft offices for sale

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Early buyers

Property analysts have pointed out that the price paid for the Woods Square site is 10% less than the $1,009 psf ppr that Sim Lian paid for its Vision Exchange site at Jurong Gateway in December 2012. Vision Exchange features a 25-storey office tower with a retail podium. It has a total of 740 units of offices, medical suites and F&B spaces. Strata offices measure 441 to 1,938 sq ft.

Since the strata offices at Vision Exchange were launched for sale in April 2014, they have fetched prices of $1,907 to $2,503 psf. The two most recent transactions were those of two adjacent units on the 16th floor: A 764 sq ft unit was sold for $1.79 million ($2,346 psf) in June and a 840 sq ft unit fetched $1.95 million ($2,323 psf) in April.

“Vision Exchange is the only office building with strata units for sale in Jurong Gateway, just like Woods Square in Woodlands Central,” says Eugene Lim, key executive officer of ERA Realty. “One can see the potential that premium strata offices in Woodlands Central can achieve as more plans unfold.”

Lim: One can see the potential that premium strata offices in Woodlands Central can command as more
plans unfold

The idea of turning Jurong East into a second CBD the size of Marina Bay (360ha) was mooted in 2008. Besides being turned into a business district, it will feature the Jurong Innovation District and terminus for the high-speed rail connecting Singapore to Kuala Lumpur. “When it was first announced that Jurong would be the next CBD, the most common comment was, ‘But Jurong is so far away,’” recounts Lim. “But look at it today. It’s completely transformed. The same thing will happen in Woodlands.”

It is clear that businesses that have seen how the government has transformed Tampines and Jurong are also willing to take a bet on Woodlands as the third regional centre. According to FEO’s Shaw, about 60% of the buyers are Singaporeans buying under their company names. She adds that many of these companies have their factories or warehouses in the Woodlands industrial estates and are looking to have an office where they can meet clients or open a showroom or sales gallery.

ERA’s Lim says the Woods Square offices also appeal to family-owned companies that are now in the hands of the second- or third-generation who tend to be more educated and more conscious about branding and image.

Most of them are buying for their own use, with some considering an investment play in addition to own use, adds Shaw. The SOLOs in particular appeal to lifestyle companies and the younger set. For instance, one of the units was sold to a wine importer who likes the high ceiling, as he intends to use the unit to display his collection and host events, she says.

Plans to extend the Thomson-East Coast Line from Woodlands North MRT station to Johor Baru has also generated keen interest among companies looking to set up their head office in Singapore, while their factories are located in Johor. Therefore, Woods Square has drawn another group of buyers — Malaysian business owners with operations in Johor. “They are already familiar with Woodlands and want to have an office in Singapore,” says Shaw. “They are our second-biggest group of buyers.”

Shaw: Malaysian business owners with operations in Johor are the second-biggest group of buyers of
Woods Square units

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Betting on transformation

Plans for the Woodlands Regional Centre were announced in 2013. The regional centre contains two precincts: the commercial components that make up Woodlands Central and Woodlands North Coast, a mixed-use business cluster. Woods Square in Woodlands Central is the first sale of site by the government since the announcement of Woodlands Regional Centre.

The second site in Woodlands Central was put up for sale last year and sits on the Reserved List of the government land sales programme, waiting to be triggered by a developer. The 99-year leasehold site has a land area of about 240,950 sq ft and maximum gross floor area of 843,327 sq ft. Sixty per cent of the GFA has to be allocated for office use, and 86,000 sq ft for retail and F&B outlets. The remaining GFA can be used to develop more office space, residential units or even serviced apartments.

More than 100ha — slightly smaller than the size of Sentosa Cove — will be made available for sale in the coming years. The land can yield 700,000 sq m (more than 7.5 million sq ft) of commercial space and generate 100,000 new jobs over the next 10 to 15 years.

The government’s intention is for the Woodlands Regional Centre to be the gateway in the northern region and anchor the development of the North Coast Innovation Corridor, which will include the future Punggol Creative Cluster and Learning Corridor and upcoming redevelopment of the Sembawang Shipyard area. It will also be linked to Seletar Aerospace Park in the future. The idea is to bring jobs closer to home, as more than half a million residents are already living in the northern region of Woodlands, Yishun and Sembawang.

ERA’s Lim says, “The potential increase in population, new jobs created, park connectors and improvement in transport network — with the North-South Corridor and the new MRT station in Woodlands North to JB, and direct connection to the CBD and even Changi Airport — will make Woodlands a more exciting place to work and live in.

“Over time, more MNCs will move to Woodlands, like what we saw in Tampines 20 years ago, when banks and insurance companies set up offices there, and what we’ve seen in Jurong in recent years.”

‘First-mover advantage’

Therefore, FEO has first-mover advantage in Woodlands, says Shaw. Woods Square may be its maiden office development in Woodlands Regional Centre, but it is not the developer’s first project in the area.

When the Singapore American School moved to its new and expanded campus in Woodlands in 1996, FEO developed a collection of 33 New England-style mansions called Woodgrove Estate, adjacent to the campus. The houses were completed in 1997 and FEO still holds many of them for lease, as they are popular with American expatriates whose children attend the school, she adds.

Asking rents for six-bedroom detached houses with a built-up area of 7,599 sq ft and occupying a 7,589 sq ft site in Woodgrove Estate are listed at $9,500 a month. Meanwhile, seven- bedroom detached houses with a built-up area of 8,547 sq ft and land area of 8,547 sq ft are available for lease at $13,000 a month. Based on the historical price of a detached house sitting on a land area of 7,459 sq ft that was sold for $3.22 million in 1997, and rental rate of about $9,500 a month today, the gross rental yield translates to about 3.5%.

In 1997, FEO developed Woodgrove Estate with its New England-style mansions, popular with American expatriates whose children attend the Singapore American School next door

FEO also developed the 478-unit Casablanca, a condominium located off Woodlands Avenue 1 that was completed in 2005. The 99- year leasehold project was launched for sale in July 2002, and units were sold at an average of $450 psf at the time. The sole transaction this year was that of a 1,184 sq ft unit on the eighth floor that changed hands for $936,000 ($791 psf) in April.

The private condo is popular with upgraders because it is just a five-minute walk from the Woodlands MRT station, according to property agents.

Adjacent to Casablanca is Woodhaven, a 337-unit residential development occupying a 225,600 sq ft site. The 99-year leasehold development offered a mix of condo units, small office, home office (SOHO) and townhouses, and saw strong sales when it was launched in mid-2011. Sale prices for the condos averaged $1,000 psf; the SOHO units were about $1,030 psf and the townhouses, $800 psf. The project was completed just last year.

In Woodlands, FEO also developed executive condo La Casa, located off Woodlands Avenue 5. When the 444-unit EC was launched in 2005, average prices of units sold were $382 psf. The project was completed in 2008. According to a caveat lodged on Aug 15, a 904 sq ft unit changed hands for $734,000 ($812 psf). The seller had purchased it in December 2005 for $379,130 ($419 psf), thus enjoying an almost doubling in value of the property over the past decade.

FEO also developed Nordcom 1 and Nordcom 2 — two light industrial (Business 1) complexes — on Gambas Avenue. The industrial sites were purchased from JTC on 30-year leases. Nordcom 1 has a total of 131 strata industrial units, of which 50% have been sold; Nordcom 2 has 347 strata industrial units, of which 40% have been sold.

While Nordcom 1 is targeted for completion later this year, Nordcom 2 is projected to be completed by 2018. In the latest transaction at Nordcom 2, a 1,668 sq ft unit on the fourth floor was sold for $475,000 ($285 psf) in June, based on caveats lodged. At Nordcom 1, the last transaction saw a 1,690 sq ft unit sold for $508,000 ($301 psf) in June last year.

Woodlands is not the only area in which FEO has been a market pioneer. “In 2012, we were a first mover in Punggol with the launch of Water town — a mixed-use complex with residential units and a shopping mall. We were also the first to introduce innercity living in Tanjong Pagar with the preview of Icon 13 years ago,” she adds.

This article appeared in The Edge Property pullout, Issue 743 (Aug 29, 2016) of The Edge Singapore.

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