People’s Park Centre Is Making A Third En Bloc Attempt — With A $320 Million Lower Asking Price

People’s Park Centre stands out for two key reasons in my mind. The first is the fury it causes, when – for the umpteenth time – someone enters the wrong address in their Grab app when they want to travel there. (Is it that easy to mistake it for the neighbouring People’s Park Complex?)

Next, this Chinatown landmark holds the title of being developed on the first ever land parcel sold under the Government Land Sales (GLS) programme, way back in 1967.

But the latest news about People’s Park Complex feels almost poetic in that context. Just as we embrace our appreciation for mixed-use projects in our urban landscape, one of the earliest examples of this type of development may be gone for good.

Here’s what’s happening: People’s Park Centre is making its third en-bloc attempt

People’s Park Centre has officially  been launched for collective sale with a guide price of $1.48 billion,  after securing an 80.54% approval from all of the owners controlling the building’s total share value.

The public tender for this collective sale begins tomorrow, July 16, and will close about two months later on Sept 16.

This is the third collective sale attempt that the owners of People’s Park Centre have attempted to date. Their first try in 2019 saw the development listed at a reserve price of $1.35 billion, but it flattered after the collective sales committee was unable to secure the necessary 80% approval from owners.

The next attempt came in 2022, this time with a much higher reserve price of $1.8 billion. The collective sale tender was launched, but it closed without attracting a successful bid.

This latest attempt at a collective sale is a bit more restrained. The new guide price of $1.48 billion is significantly lower than before, and to my mind it seems tempered by the awareness of narrowing developer margins and the challenges of redeveloping the site in a neighbourhood that from my perspective isn’t too family-oriented.

The guide price translates to about $2,455 psf per plot ratio (ppr), and it assumes it will get the approvals needed to top-up the lease for a fresh 99-year leasehold tenure. We also don’t know if any Land Betterment Charges – the tax payable on the increase in land value from the change of land use – will be payable if it is redeveloped into a mixed-use project.

Ironically, the site’s greatest strength is also part of its challenge. 

People’s Park Centre boasts solid locational attributes, with a prominent location at the junction of Eu Tong Sen Street (where it also enjoys a 124m street-level frontage) and Upper Cross Street.

It’s also connected to Chinatown MRT Interchange on the North-East and Downtown Lines, and the building is close to the Central Business District (CBD).

Under the Master Plan, the site is zoned ‘Commercial’ with a gross plot ratio (GPR) of 8.6, making it one of the largest redevelopment opportunities in Singapore’s Core Central Region (CCR).

Part of the announcement of the collective sale tender is a suggestion that the site could be redeveloped into a new mixed-use project, comprising around 60% commercial and 40% residential. This would be subject to planning permissions and approvals.

However, there are two major issues that I can see.

First, the large size of the plot doesn’t just mean a much larger capital commitment. It also means a longer construction timeline and potentially many more residential units that need to be sold within the five-year deadline for the remittable portion of the Additional Buyer’s Stamp Duty (ABSD).

Miss that deadline and the developer stands to lose the 35% remittable ABSD. That’s roughly $518 million based on the $1.48 billion guide price.

Next, the largest and most active buyer group in the Singapore property market are HDB upgraders. These buyers are predominantly families, and Chinatown isn’t the most ideal place to raise one. For families, schools, neighbourhood parks, and larger homes tend to take precedence over being within the CBD – even if there’s an MRT station nearby.

Bearing in mind that developers can no longer rely on affluent foreign buyers for higher-cost CCRF projects, since the ABSD rate imposed on foreigners purchasing residential property in Singapore is now 60%. Thus, I fear that if the site is redeveloped, the future project will have to be a product that appeals to locals.

Together, I find that these factors explain why the guide price had to be more realistic for this latest collective sale attempt. It is one of the largest redevelopment opportunities to come along in the CCR in a long time, and would be a landmark project for any developer or consortium of developers.

But I sense that the pool of developers capable and willing to take on a project of this size could be quite small. The collective sale is marketed by ERA Realty, so they must feel that it is worth the attempt.

Still, there are reasons for the owners of People’s Park Centre to be optimistic, compared to their unsuccessful attempt in 2022

In general, the Chinatown area is embarking on its next transformation phase. The government’s planned 60-storey BTO project at nearby Pearl’s Hill will bring thousands of residents back into the city centre over the coming years.

Unlike office workers, residents generate activity throughout the day, creating more demand for supermarkets, restaurants, cafés etc. This feeds directly into the mixed-use nature of the redevelopment. 

A larger residential population could make units here easier to move in the resale market, but that’s also contingent on the area becoming more family-oriented.

ERA also seems optimistic about the prospects. Sunny Wong, Division Director at ERA Realty Network and the person leading the collective sale exercise, says: “Opportunities of this scale rarely come to market. Coupled with the surrounding area’s ongoing rejuvenation, we expect People’s Park Centre to attract strong interest from developers seeking to deliver a signature project”.

Pearl Lok, Director of Capital Markets & Investment Sales at ERA, also pointed to the site’s unique position within Chinatown. “People’s Park Centre is prominently located in the heart of Chinatown, with excellent connectivity to the CBD and the wider city. Given its scale and central location, the site represents a rare opportunity for a future redevelopment to contribute to the continued evolution of the precinct, while building on the area’s established mix of commercial, residential and lifestyle offerings”.

In any case, the results of the tender after it closes on 16 September is bound to be closely watched.