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Property In Singapore: What Are Mixed-Use Developments VS Integrated Developments

Would you enjoy having the MRT and other amenities such as a shopping mall and hawker centre right below your home?

It used to be just location, location and location, when it came to property purchasing. Now, another mantra, convenience has to be uttered along with location.

We have seen a recent push over the last couple of years to integrate different public amenities such as the community centre, library, swimming pool, gym, hawker centre, medical facilities, other F&B and retail outlets under one roof.

This is to not only maximise land usage, but also to provide greater convenience to the residents. Some of these integrated hubs are Our Tampines Hub, Heartbeat@Bedok and Kampung Admiralty.

This idea to house different uses, such as residential and commercial units in a single building is not new. We have seen such developments being termed as Mixed-use developments.  However, in the last decade or so, Mixed-use developments have evolved further to become Integrated Developments.

In this article, we delve into what these Mixed-use and Integrated Developments are.

What Are Mixed-Use Developments?

It’s an urban development strategy to enhance our living environment by blending both the residential and commercial spaces in the form of either a single building, or as a cluster of buildings. Typically, the residential tower sits on top of the commercial podium of the building.

According to the URA guidelines, the Mixed commercial and residential developments may either be developed on land zoned as Commercial & Residential or Commercial.

For developments built on a Commercial & Residential zone, the residential space should make up a minimum of 60% of the total GFA and with a maximum 40% of the GFA allocated for commercial use. Whereas, for developments built on a commercial zone, a minimum of 60% of the total GFA is made up of commercial with the non-commercial (i.e.: residential) use to be decided upon by the Competent Authority.

The Mixed-Use developments can be further segregated on the basis of ownership, of the Commercial podium of the building. The commercial units can either be owned and managed by a single owner, which is usually the developer or be sold as strata units.

Generally speaking, a reputable developer would have the financial clout and expertise to entice an exciting mix of well-known anchor tenants and start-up brands, keeping the retail mall more vibrant compared to owners of strata units. These individual strata unit owners whom have to find their own tenants would prioritise their rental returns over the right mixture of tenants.

Read Also: An Introduction To Commercial Properties In Singapore

What Is An Integrated Development?

The final type of mixed-use developments that are gaining popularity in recent times are integrated developments. In addition to the above structure of a Mixed-use development, Integrated developments have direct access to public infrastructure facilities such as MRT station and/or Bus interchanges and can be next to other communal amenities such as hawker centres, and community clubs.

As an example, we have highlighted the Bedok Residences & Mall Integrated Development.

The project consists of the commercial podium – Bedok Mall and the residential tower – Bedok Residence. The development is also connected to the Bedok Bus interchange and Bedok MRT stations via underground passageway. Furthermore, it is also next to other communal amenities such as the Bedok Hawker centre.

The Allure Of Integrated Developments

These Integrated development projects have been highly sought after by buyers because of the greater convenience such properties offer.  Moreover, due to the small supply of available units in such projects, buyers are willing to pay a higher premium, of around 7% – 19%, according to an analysis done by OrangeTee & Tie in 2018.

The current available supply stands at slightly under 9,000 and is less than 3% of the total available non-landed residential stock in Singapore.

We have tabulated the current list of Integrated Developments (ID) and here some interesting facts we found:

#1 The first ID to be built was Compass Height at Sengkang in 2002

#2 Out of the 15 IDs, only 9 IDs are connected to both a MRT station and Bus Interchange

#3 Typically, each ID project consists of around 400-600 residential units, with the smallest being Orchard Residences at a total of 175 residential units and the largest being Marina One at a total of 1,042 residential units.

#4 The biggest release of IDs were in 2017-2018, with around seven projects that got TOP.

#5 The biggest Mall for an ID is North Point at over a whopping 1,330,000 sqft.

Benefits of Mixed-Use Developments and Integrated Developments

Unparallel Convenience

The biggest selling point of any integrated project is its location and the convenience that it offers in the district. These projects connect their residents to key transport nodes such as MRT stations and bus interchanges all within a sheltered and short walking distance.

Moreover, the retail malls that are part of the integrated projects are usually owned and managed by the developer and are well sized at over 100,000 sqft of net lettable area. Therefore, the malls would usually have a good mix of tenants ranging from supermarkets, food courts, F&B outlets, medical clinics and other useful amenities.

Due to the current COVID pandemic, where companies have been required to implement WFH (work from home) measures, we believe such work practices will continue to gain further acceptance and adoption even after the circuit breaker period. For such workers, Mixed-use developments offer the opportunity to live, work, relax and play – all in one place.

Greater Savings

Under the Sustainable Singapore blueprint, there is a greater push for Singapore to go “car-lite” in the next ten years. With the connectivity that is offered by Integrated Developments, residents in these projects will be less reliant on private cars for their daily commute.

The savings from car ownership could be worth at least $100,000 – $150,000 over a 10-year period. This includes your car financing charges, parking, ERP, insurance, road tax, car maintenance and for the occasional “fines.”

Additionally, as integrated developments are connected to either a MRT station and/or bus interchange, you can save money and time of around 10-20 minutes from waiting and taking a feeder service.

Lately, we have heard of how food delivery companies are increasing their pricing. If you were to have a food court and other F&B outlets within your doorstep, then you would not be dependent on these food delivery services and be able to pick up your food in minutes, saving the food delivery costs.

“Safer” Investment

A Mixed-use development in a good location with strong retail management would naturally be attractive to potential home buyers, investors and tenants. Such projects would receive higher transaction volumes in both sales and rentals. Such positive demand keeps the property more liquid for home sellers and allows property owners to seek higher rentals from eager tenants.

Given the small supply of Integrated developments that are available in the market, this means demand is likely to be greater as the population gets bigger and affluent. The value of such properties would tend to hold better over time compared to other single-use residential leasehold projects of similar age.

Therefore, in a negative property cycle, the premium commanded by these projects will limit the downside compared to projects that are not as well-connected to transport nodes or has no differentiated selling point.

Disadvantages of Mixed- Use Developments and Integrated Developments

Lack of Exclusivity

Ironically, the biggest disadvantage of mixed-use developments is due to its biggest advantage. If the project is well-connected and the retail mall is well received by the public, then it  loses a sense of exclusivity for the residents living above, as they have to go through a large crowd whenever they head home.

Moreover, if the resident were to drive, they would have to deal with a heavy traffic during peak hours around the development. The resident would also need to wait in-line with other visitors to enter the car park, as sometimes there would only be a single entrance leading to the carpark.

Possibilities Of Noise And Smell Nuisance

The bigger the retail mall, the higher the potential issues of noise and smell. In a well-connected integrated development, residents in the district would regularly congregate in the mall for their daily essential shopping and entertainment needs. Retail mall tenants might engage in marketing campaigns over loudspeaker systems to attract the crowd, which might echo to the residential units on top.

Moreover, with the integrated projects next to bus interchanges and MRT stations, some noise and exhaust fumes from these transport modes will be inevitable.

Lastly, with F&B outlets, there will be more food waste being generated. The waste collection system used by the project can also contribute to the smell nuisance during waste collection. For example, if the project uses a pneumatic waste collection system, the air discharged from the system could emit a foul smell, which will affect the residents on top.

Possibility Of Parking Shortages

Projects in the CCR and RCR might have a lesser parking lot ratio of 1: 0.8 compared to projects in OCR. This means residents in the Mixed-use developments in the Central Core Regions and Rest of Central Region might have a lesser allotment of car parks for the total number of residential units. Residents with multiple cars and visitors of the residents would then have to compete for and use the parking lots meant for the visitors of the mall.

Integrated And Mixed-Use Developments Are Built With Different Needs In Mind

As with any development, there would always be pros and cons. The mixed-use developments give buyers an added convenience and the option to be able to live and play all under one roof.

Whether an Integrated Development is considered for own stay or as an investment, its attractiveness is multi-faceted. In a land-scarce country like Singapore, properties that offer good connectivity and is in a good location will generally be in good demand as the population in the vicinity grows.

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