Some Orchard Road properties are changing hands. Can new owners give it a new lease of life?

It is planning a mixed-use development with retail, office, wellness and cultural uses, with early images released by Urban Redevelopment Authority (URA) showing extensive greenery and landscaped terraces.

Also in 2022, nearby Ming Arcade was sold for $172 million to Singapore-based Royal Group. The freehold commercial complex has been demolished to build a 165-room luxury hotel, which is expected to open in 2027.

Meanwhile, Hotel Properties Limited (HPL) has obtained approval to redevelop Forum The Shopping Mall, voco Orchard Singapore, and HPL House.

Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore, said Orchard Road remains a world-renowned street and properties for sale there always excite the market.

Whether buyers acquire them for redevelopment depends on the property, he said.

This is especially so for older or strata-titled properties, said Joseph Ooi, co-director of the Institute of Real Estate and Urban Studies (IREUS) at NUS and professor of real estate at NUS Business School.

He added that some may be ageing, harder to lease, or in need of more proactive upgrading.

Recent sales handled by Savills – including Tanglin Shopping Centre, Ming Arcade and Concorde Hotel and Shopping Mall – were sold for redevelopment.

Paragon, by contrast, was probably acquired more for its value-add and asset enhancement potential, said Lake. He also handled the sale of Delfi Orchard and part of The Centrepoint.

A broader precinct, not just a retail strip

Part of Orchard Road’s ongoing transformation can be attributed to the Strategic Development Incentive (SDI) scheme, which was introduced in 2019.

The scheme aims to encourage the redevelopment of older buildings into bold and innovative projects that will positively transform the surrounding environment.

Under this scheme, developments in strategic areas such as Orchard Road and Singapore River may be able to increase their gross plot ratio or gross floor area (GFA), if they have innovative proposals that transform the precinct they are a part of.

Such ideas include the provision of high-quality public spaces, car-lite measures and conservation efforts, for example.

Any bonus GFA or increased intensity is subject to the standard land betterment charge.

A land betterment charge (LBC) is a tax levied on the increase in land value when planning permission is granted for development.

To qualify for the scheme, the buildings must have a minimum age of 20 years from the date of the last temporary occupation permit. Submissions will be assessed on a case-by-case basis.

Under this scheme, an older property such as the former Faber House in Somerset is being redeveloped into a hotel with skyrise greenery.

“Together with the planned adaptive reuse of 37 Emerald Hill for cultural and lifestyle uses, these projects will introduce new experiences and strengthen connections within the precinct, contributing to Orchard Road’s continued rejuvenation,” said a URA spokesman.

To date, eight of 13 applications received under the scheme, including for Orchard Road, have received in-principle approval, with two under construction, she added.

“Ownership changes can create opportunities for owners to refresh and enhance developments and their surroundings,” said the URA spokesman. But the specific approach depends on each owner’s plans and commercial considerations, she added.

In some cases, rejuvenation does not require redevelopment.

Proposals that retain existing buildings while achieving positive transformation can also qualify for the Strategic Development Incentive scheme, said URA.

Still, analysts say such incentives may not be enough to transform older, underused properties into bold, mixed-use projects.

For one thing, land betterment charges are often high and paid upfront, eroding the financial appeal of redevelopment, Lake said.

Ooi noted that owners and developers may also be put off by construction costs, financing costs and lost income during redevelopment.

More than shopping

ION Orchard, which opened 17 years ago in 2009, remains the last mega development to make a major architectural impact on Orchard Road’s central stretch.

Analysts suggested that the way forward should be to look beyond retail.

Developers should be allowed to include a meaningful office component, Lake said.

He pointed out that major cities such as London, New York and Tokyo have offices in or near their prime retail streets.

If there are private homes in a new development, cash flow could be improved because of progressive payments during construction, he added.

Rejuvenation is complex because the street is mature and highly built up, said Mark Shaw, who chairs the Orchard Road Business Association (ORBA).

Often, there are “multiple stakeholders, ownership structures and infrastructure constraints” involved, he added.

For example, it is more challenging for older strata developments like Lucky Plaza, Far East Plaza and Far East Shopping Centre to undergo coordinated redevelopment.

Yet these older properties add character to the precinct with their eclectic tenant mixes, making them different from larger malls, said analysts.

What Orchard Road also needs is something more organic and more distinctly Singaporean, while remaining commercially viable, Ooi added.

Its future is unlikely to come from “a single landmark alone”, but from a precinct with greener buildings, better pedestrian connections, more varied uses, stronger street-level activity and, over time, perhaps more residents, said Ooi.

The challenge is to make Orchard Road “not just a string of malls, but a place to walk through, linger in and enjoy”, he added.