Paya Lebar Central generating buzz

Interest in Paya Lebar Central is rising fast as plans to develop it into a major commercial hub take shape.

Its location near the city centre and upcoming developments around it make it an attractive target for investors, analysts said.

A new 3.98ha commercial site was put on the confirmed list of the Government Land Sales programme for the second half of the year just last week.

A new building, able to accommodate up to 132,000 sq m of gross floor area, could comprise a mix of office, retail and hotel components, experts said. It will have direct links to transport nodes at the Paya Lebar interchange and MRT station, where the Circle and East-West lines meet.

"With the new available site, there will be renewed interest from developers in this area," said Ms Alice Tan, research head at Knight Frank.

Paya Lebar Central has long been home to a handful of industrial properties and factories, with the Singapore Post Centre the main commercial building in the vicinity.

Mr Ong Kah Seng, director of R'ST Research, estimated that 12ha of land is available for development in the area, which translates to about 500,000 sq m of commercial floor space.

The Government's plans for Paya Lebar have spurred much interest in the area, and led to brisk sales at SunVenture's Paya Lebar Square when it was launched in April 2012.

The 99-year leasehold development, next to the Paya Lebar MRT station, sold 281 of its 556 strata office units at about $1,750 per sq ft (psf).

There were also 26 sub-sale units at Paya Lebar Square that changed hands at $2,000 to $2,200 psf from the fourth quarter of 2012 to the second quarter this year, Urban Redevelopment Authority (URA) data shows. This represents a gain of at least 10 per cent for buyers of units at the project's launch.

A mall of about 132,500 sq ft will be part of the commercial building. It is expected to add to the area's vibrancy and help its office owners achieve better returns, said Mr Ong.

Older office developments such as Roxy Pacific's WIS@Changi along Everitt Road North have also recorded price gains. The 83-unit building had 15 caveats lodged with the URA last year, while its average selling price climbed 12.4 per cent to $1,828 psf in the same 12-month period.

There were 21 retail units transacted at Centropod@Changi - also a Roxy Pacific project - in the same period. The average prices of units at the Changi Road building rose 19.7 per cent to $3,931 psf over the year.

Although Paya Lebar Central is shaping up to be the next commercial hub, the supply of office and retail space in the central region poses some competition, said Ms Tan.

But monthly rents of older offices in the Central Business District have averaged about $7.50 to $8 psf, while rents in Paya Lebar Central are about $7 psf on average, noted Mr Ong.

This could give firms some incentive to relocate to a suburban office, he said.

ocheryl@sph.com.sg

This article was first published on June 21, 2014.
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