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Writer's pictureIvan Lam

The Singapore Decentralisation Project

“Dread it. Run from it. Destiny arrives all the same.” – Thanos
decentralisation

While Thanos may be talking about more dire matters such as taking away half of the world’s population, I’m actually referring to Singapore’s decentralisation efforts. It is happening. In fact, it has already happened for a while now.


Singapore has begun their decentralisation plan since 1991 when they introduced their Concept Plan. Back then, the Government had already anticipated traffic congestion to worsen in the Central Business District (CBD) during the peak hours. To solve this problem before reality truly hits hard, they came up a Singapore Plan. A Concept Plan.


We look further at this decentralisation project next.

The Decentralisation Project

Simply put – they will try to bring commercial activities out of the CBD to other parts of Singapore. This will not only ease traffic congestion, it will also bring jobs closer to homes and allow more affordable offices.


This is of course not as simple as it sounds (or does it not?).


To achieve this and also to justify companies moving out of the CBD, there are things to do. This involves modifying the minds of companies and workers, as well as changing the physical landscape island-wide to achieve this.

Infrastructure

The most basic step to get companies to establish their offices out of the CBD. As the traditional CBD is already established with all the necessary infrastructure, companies and workers will find operating there much easier.


Infrastructure can refer to things such as proper offices that helps and value adds to business operations and transport options in the vicinity. It can also refer to other things like ease of grabbing a meal for the workers and access to support services like banking, postal, etc.


The Government then needs to replicate such infrastructure to other areas of Singapore. It is also given a chance to fine-tune these offerings to suit a particular industry so as to increase productivity and incentivise them moving out of the CBD. For example, IT services at Changi Business Park and research & innovation at one-north. More recently, we have the construction of Punggol Digital District for companies in the tech sector and a high tech agri food cluster in Lim Chu Kang – a result of the need for food security in light of COVID-19.


Critically too – public transport options have to be well-developed for such areas. The idea is to reduce traffic congestion from vehicles, so by offering good public transport alternatives – you can reduce vehicular congestion.

Accessibility & Proximity

Beyond constructing a transport hub, it is still a pain for people to commute if their new office is too far away. Imagine if a worker stays at Pasir Ris and his/her office shifted from the CBD to Jurong. How much time will be spent commuting daily?


As such, there is a need to create the buy-in from workers and to make this commute as easy as possible. Of course, this will be tricky and it is understandable that some workers may not want to travel such distances everyday.


However, if more offices spring up in the heartlands – there might be more opportunities nearer to them and the overall objective can still be achieved.

Attractiveness of offices outside of CBD

While workers have their own concerns on travelling, companies also have their own concerns on operating their business outside of the CBD. This can come in the form of simply grabbing the easier & safer option of getting an office space in the CBD.


Also, office rental rates disparity is narrowing over time and there is STILL a lack of proper office supply outside of the CBD currently. This makes it harder to incentivise companies to move out of the CBD.


Asides, CBD office rental rates can fluctuate quite a bit as well, so it may make sense for companies to “time the market” to get an attractive office rental rate. Below, you can see how rental rates fluctuate in District 1.

D1 office rental

D1 Office Rental Fluctuations


However, we all know companies are practical and logical. The Government can definitely help to ease this concern by releasing more quality supply outside of the CBD.

Where Are These New Areas Then?

regional centres singapore

The decentralisation project involves the creation of regional centres and other business points across Singapore. You can see it above.


These areas have steadily increased over time and there are now more decentralised offices planned than ever. What have started with Jurong as our second CBD and Paya Lebar as the third CBD have evolved to this now.


By doing this – you can imagine the aim will not merely stop at easing traffic congestion. It also helps with better land use, increase productivity and create higher resilience.

What Happens To The CBD Now?

You may now think – as more companies move out of the CBD, what will happen to the CBD now? An increasingly dead town maybe?


Definitely not! You must note that the CBD is the most prime land we have on our land-scarce nation. As the previous section mentioned, the idea is to have better land use and this applies to the CBD as well.


Their plans involve rejuvenating the CBD by creating a “work, live, play” environment. They are open to developers proposing more creative uses and mixed-usage involving commercial and residential elements. The aim also is to turn the CBD into a “24/7 mixed-used district” which the Government has recognised that traditionally the CBD turned into a dead town after working hours. You can read all about this in an URA Circular here.


We have also seen some examples of such mixed use developments such as South Beach Residences and the upcoming developments of Guocoland’s Midtown Bay and Midtown Modern.

Midtown Bay

Midtown Bay & South Beach in the distance. Artistic Impression


How Can It Impact Singapore Property Prices?

My opinion is that, if the decentralisation effort is accomplished well, will have positive impacts on property prices all across Singapore. Why do I say that?


Let’s look at the CBD first. By decentralising and remove the concentration of purely offices in the CBD, it allows more different usage in this area now. There will be new residential projects in this area and it will be sitting on the most prime of land. This may see residential prices climbing as more value of a “work, live, play” environment is created. Offices, by logic, should see their rental or prices fall. But this may not necessarily be so. Big, prestigious firms such as banks and financial firms will still want the prestige of a CBD address and that will help keep maintain the demand of CBD offices.


However, further out of the CBD – the value creation of regional centres will drive the demand of companies wanting to take up these new offices as they offer lower rentals and greater infrastructure particular to their industry – eg high tech agri at Lim Chu Kang, tech firms at Punggol Digital District. Residential prices will also be positively impacted as people may now prefer to stay further away from central areas as there are no real incentive to be near town if their workplace is not there. This increase in demand can drive residential property prices up in the RCR and OCR areas.


To add, in the current period of COVID-19, remote working has become common place. Getting a cheaper, bigger place away from the central is increasingly a preference as people travel less to work. The Work-From-Home (WFH) culture may also well be a permanent thing post-pandemic. This has gotten companies and workers thinking of a new norm.

To Summarise

The Singapore decentralisation project can have a wide and profound impact across Singapore real estate.


A result of a “work, live, play” environment across Singapore allows better productivity and livability in more areas of Singapore. And this is of course not a bad thing which we can all get behind.


How will Singapore's decentralisation affect you, and what can you do? Learn more with us here!

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