The development arm of CapitaLand Group is partnering with a REIT from its own stable in a S$883 million ($653 million) redevelopment set to triple the size of a commercial project in Singapore Science Park, according to a release late Monday.
Capitaland Development and Ascendas Real Estate Investment Trust (A-REIT) have formed a new joint venture which has purchased 1 Science Park Drive from A-REIT for S$103 million, with the goal of redeveloping the 2005-vintage property into a 116,200 square metre (1.25 million square foot) life science and innovation campus.
“As the master developer, owner and operator of SSP 1 (Singapore Science Park 1), we have been steadily unlocking the precinct’s potential through redevelopment and land intensification initiatives, and will continue to do so in the next few years,” Jason Leow, chief executive officer of CapitaLand Development. “The redevelopment of 1 Science Park Drive is the latest milestone in this strategy, aimed at providing modern workspace solutions in a campus-style environment that will reinforce SSP 1’s position as one of the most prestigious R&D (research and development) hubs in the region.”
The local property giants are taking on the project in western Singapore as technology and life science corporations begin to outstrip other industries in occupying office space in the Lion City. Speaking at an MTD TV forum earlier this month, JLL executive director Tim Graham said that the footprint of Singapore’s tech industry is already set to surpass that of financial services as Singapore’s role in the New Economy continues to expand.
Partners Eye Life Science Campus in Four Years
“If you look at the growth of the tech companies in Singapore themselves, between 5 and 10 years ago about half of the take-up was really focused on the financial services tenants,” Graham said. “Now, financial services is really only 25 percent and that’s where the tech companies have stepped in. So we’ve seen a lot of growth in the interest for tech tenants coming into Singapore.”
Capitaland Development and A-REIT are banking on that burgeoning tech demand as they enter the new joint venture with the developer taking a 66 percent stake and the listed trust owning the remaining 34 percent.
After developing a series of projects in the region since Singapore Science Park was first established in 1982, CapitaLand Development already owns around 20 properties across Singapore Science Parks 1 and 2. Ascendas REIT is managed by a unit of CapitaLand Investment, which was separated from CapitaLand Investment when the Temasek Holdings-controlled property group restructured this year.
Aiming at R&D
The current 1 Science Park Drive measures 31,856 square metres and was previously occupied by engineering firm TÜV SÜD PSB. The project will involve increasing the development’s gross plot ratio by threefold to 3.6 from 1.2, with completion planned for 2025.
With that expanded plot ratio the partners aim to create a life science and innovation campus with 112,500 square metres across three interconnected buildings; a single 15-storey tower linked to a pair of nine-storey followers. An additional 3,700 square metres will house an event centre which will also provide retail, food and other supporting amenities.
Banking on the growing focus on healthcare and digital, the planned business park will target new economy tenants including companies in the biomedical sciences and other technology industries that are looking to expand their operations in Southeast Asia’s most developed city. CapitaLand Development said 71 percent or 80,000 square metres of the total space will be designed specifically to cater to R&D activities.
“We are seeing resilient demand for quality business park properties in Singapore, and are encouraged that several reputable technology and biomedical R&D players have already expressed strong interest for the upcoming spaces at SSP 1,” Leow said, adding that the new venture is expected to boost the company’s recurring income stream.
He said the redevelopment plan will run parallel to CapitaLand Development’s transformation of the former Franklin building at 3 Science Park Drive into a 38,818 square metre project integrated business park space with serviced residences.
William Tay, chief executive of the manager of Ascendas REIT. said his firm expects the investment to yield a net property income rate of 6.3 percent on a stabilized basis, while the Singapore-listed trust enjoys the first right to acquire the remaining 66 percent of the JV once occupancy rates in the property have been stabilised.
CapitaLand Development and Ascendas REIT have hired architects from London-based Serie and Singapore’s Multiply to work on the design of the structure.
Redeveloping 1 Science Park Drive forms part of a phased plan to reinvigorate Singapore Science Park 1, which has already witnessed the redevelopment or renovation of eight properties in the 39-year-old development. Among the fresh projects are 12, 14 and 16 Science Park Drive, as well as the Ascent building at 2 Science Park Drive.
Health, Digital Focus Drive Demand on Tech Hubs
The upcoming life science business park will add to the growing supply of tech and R&D office facilities in the One North area as property giants cater to global digital and healthcare companies looking for more space for their expansion.
In January of this year Blackstone agreed to pay S$175.8 million to purchase 1 Fusionopolis Link, better known as the Sandcrawler Building, from a unit of Lucasfilm, as the fund management giant brought its theme of investing in tech-driven office markets to western Singapore.
Then in September, 10 groups competed to pick up a pair of residential development sites in One North, with the winning bids for each site coming in a the top range of analyst expectations.
In September of last year CapitaLand had announced plans for Rochester Commons, a S$550 million project in One North integrating a 17-storey office tower, a shared executive learning centre, and a business hotel.