Some 65% of PDD’s 175,000 sqm of business park and office space has been pre-committed, and tenants will start moving in from mid-2025. Could it give Changi Business Park a run for its money?
The first phase of JTC’s new Punggol Digital District (PDD) — eight towers of business park and mixed-use space across 12ha — will be fully constructed by 1Q2025. Some 65% of the 175,000 sqm of business park and office space has been pre-committed, and tenants will start moving in from mid-2025.
But PDD is debuting at a relatively soft period for the sector. According to JTC’s own quarterly market report, overall industrial rents in Singapore rose 0.3% q-o-q in 3Q2024, the slowest increase since 4Q2021.
Business park rents, in particular, softened by 0.2% q-o-q.
While demand for industrial space increased by 58,000 sqm during 3Q2024, companies are cautious about expansion plans, says Lee Sze-Teck, senior director of data analytics at Huttons Asia.
See also: Singapore’s first district-level smart grid could lower tenants’ power bills
According to Lee, the bulk of the demand in 3Q2024 came from the multi-user factory space, which saw rents rise 0.6% q-o-q, beating q-o-q changes in the other segments of single-user factory space (0.3% decrease), business park (0.2% decrease) and warehouse (0.1% increase). “Some of the demand came from North Asian companies using Singapore as a base to expand to other Southeast Asian countries.”
Aside from rents, the q-o-q increase in the price index of all industrial space in Singapore also slowed to 0.5% from 1.2% in the previous quarter. “With the continued slowdown in prices and rentals, developers were more cautious in bidding for the Industrial Government Land Sales site targeted for a generic multiple-user development that closed in 3Q2024,” reads JTC’s report.
With a 30-year tenure, the 2.09ha site at Penjuru Road received four bids and was ultimately not awarded.
See also: OCBC to invest some $500 mil in Punggol Digital District, sets up SIT learning lab
PDD is also joining a saturated market. As at end-September, some 0.2 million sqm of new industrial space is expected to be completed in 4Q2024, with a further 1.6 million sqm of space expected to come onstream in 2025.
For context, the average annual supply and demand of industrial space were around 0.9 million sqm and 0.5 million sqm, respectively, over the past three years.
Nelson Liew, group director of new estates at JTC, says his team is selective when choosing tenants, as PDD’s value proposition is focused on creating “ecosystems” where “the whole is bigger than the sum of its parts”
Ecosystem focus
Still, Nelson Liew, group director of new estates at JTC, says PDD’s value proposition is different — it is focused on creating “ecosystems” where “the whole is bigger than the sum of its parts”.
Incoming tenants are largely from the supposedly burgeoning cybersecurity, artificial intelligence (AI) and robotics, fintech and smart living sectors. “Once related companies along the same value chain come in, they will be able to create programmes; people can bounce off each other and hopefully find value in being in this ecosystem,” says Liew to The Edge Singapore.
See also: UOB ‘making steady progress’ on upcoming fintech lab in SIT Punggol
PDD also faces the inevitable comparison with Changi Business Park (CBP), which is also owned by JTC. In fact, Deputy Prime Minister Gan Kim Yong issued a written reply to a similar parliamentary question in August, saying JTC does not expect the upcoming supply of space at PDD to “significantly affect” vacancies at CBP, as PDD and CBP “cater to different industries”.
“CBP’s tenants are predominantly financial institutions engaged in back-end support, whereas PDD’s tenants are primarily in emerging technologies such as cybersecurity, artificial intelligence and robotics, fintech and smart living,” says Gan.
Liew says CBP’s space is “more generic” and its tenants are “more related to the back-of-house functions of financial institutions”. “The value proposition is very different. Whether it will cannibalise [CBP] — I think we are going after a very different user base.”
PDD will be around for the “next 60 to 80 years”, claims Liew, and JTC — in contrast to its early years of wooing tenants to set up shop at what was then the Jurong Industrial Estate — is now being selective in admitting tenants. “As much as we want to have as many people on board as soon as possible, it’s not a case where whoever wants [to lease a space in PDD], we’ll just allow them to come in,” he adds.
Liew, who is also overseeing JTC’s mixed-use industrial estates in one-north (200ha), Woodlands North Coast (100ha) and Jurong Innovation District (620ha), thinks it is “no mean feat” that PDD has achieved 65% pre-committed leases “even before the building is completed”.
He adds that PDD faces a “different set of challenges” from the rest of the industry, given its focus on “specific thematic industrialists” in the four sectors mentioned.
Liew believes occupancy will pick up as early as next month when the Punggol Coast MRT Station opens to the public. “Once the MRT opens, once we have the first batch of tenants come in, when the estate is fully operational, we are quite confident that this will be quite vibrant… We think it will pick up even faster once people can see and feel [the district] for themselves.”
The 800m-long Campus Boulevard runs between the 12ha plot in Punggol Digital District’s inaugural phase and the Singapore Institute of Technology’s 9ha campus
GovTech, banks to anchor
Liew’s career background explains his focus on attracting tenants that fit JTC’s criteria. Before joining JTC in 2020, Liew was director of leasing at the Singapore Land Authority. As indicated on his LinkedIn profile, Liew was responsible for the marketing, leasing and maintenance of 2,800 residential and commercial state property assets with a total annual rental of $480 million.
So far, PDD’s incoming tenants from the public sector include the Government Technology Agency (GovTech) and the Cybersecurity Agency of Singapore.
Other Singapore-based tenants include AI and robotics firm dConstruct, systems integrator Delteq, blockchain solutions provider Wanxiang Singapore and the Association of Information Security Professionals.
But the tenants that could make the biggest splash are local banks United Overseas Bank U11 (UOB) and Oversea-Chinese Banking Corporation (OCBC).
UOB announced in April 2023 that it will invest over $500 million to build its global technology and innovation centre in PDD. Targeted to be completed by the end of next year, the 300,000 sq ft centre will house around 3,000 UOB staff.
UOB also announced then that it had signed a memorandum of understanding (MOU) with the Singapore Institute of Technology (SIT) to set up a Fintech Innovation Lab housed in SIT’s 9ha campus within PDD.
More than a year on, however, the MOU remains an “understanding”, for work has yet to begin on the lab. SIT president Prof Chua Kee Chaing said at a Sept 18 briefing that talks are still in progress. “We currently don’t have a lab with UOB… [It is] still in discussions.”
Still, the two parties aim to launch the lab next year, according to a joint statement by Bryan Lim, head of talent and development at UOB, and Bernard Nee, deputy president (industry and community) at SIT.
In response to The Edge Singapore’s queries, Lim and Nee say UOB and SIT are “finalising the finer details of the lab”. “Aligned with our initial commitment, this joint lab will provide training and development on key areas such as fintech innovation, artificial intelligence, cybersecurity and anti-financial crime and allow users to participate in applied research and innovation to deliver integrated solutions that address real business challenges.”
Meanwhile, OCBC announced its own $500 million investment in PDD in September this year. The 430,000 sq ft OCBC Punggol, when completed in 1Q2027, will become the bank’s second-largest office premises after its head office in Chulia Street.
Up to 4,000 OCBC employees — mostly tech staff — will be housed across eight floors of a 12-storey mixed-use tower. OCBC will occupy the fourth to 11th levels of the tower, and fit-out works are expected to be completed in early 2027.
OCBC also has an office in Tampines that houses its tech staff, along with a regional data centre in an unspecified location in the east of Singapore.
OCBC group CEO Helen Wong says the bank is still in the early stages of designing its space at Punggol and declined to reveal how many staff could be transferred from its Tampines office.
Wong also says the bank will keep “most of its existing premises” islandwide, with more plans to be announced “later on”. The $500 million figure, which matches UOB’s sum, includes the “acquisition cost” for the eight floors of the tower, says Wong on Sept 18. However, she declined to disclose the breakdown of the sum.
OCBC is also funding the establishment of a new 440 sqm learning lab at SIT’s Punggol campus. Currently equipped with more than 30 Bloomberg Terminals, the lab can house up to 100 terminals and host a maximum of 100 students at a time. According to SIT, the Analytics and Innovation Lab will be a vital resource for students of the Accountancy and Applied Computing (Fintech specialisation) degree programme.
In addition, OCBC will award five SIT undergraduates “bond-free” scholarships for the 2025 academic year. Valued at $11,000 each per year, recipients of the scholarships will be supported for up to four years. According to OCBC, these students will also be given internship opportunities with the bank.
Campus traffic
Aside from PDD’s tenant focus, the district is also unique in housing SIT’s campus. SIT has some 12,000 students spread across seven campuses in Punggol, Dover and within Singapore’s five polytechnics.
SIT is moving its entire student body into its 9ha Punggol campus in phases. Some 3,800 students began using the space in August, while the remainder of the student body will move into the Punggol campus by May 2025.
Following the move, the only SIT programme that will continue to be administered outside PDD will be the Bachelor of Business Administration in Food Business Management, a joint programme with the Culinary Institute of America. The SIT-CIA programme will continue to be taught at Temasek Polytechnic’s campus.
Liew believes PDD’s focus on getting tenants to collaborate with SIT’s academic functions “is a very big selling point”. “A lot of our users actually find it very useful to tap on the resources of the university — both the faculty and the students — because some of them may not have their own manpower to be able to undertake research projects.”
This collaborative style has worked “very well” for JTC at its one-north business park, and Liew hopes to transplant it to PDD. “At PDD, the integration is even deeper because of how we structure our leases and how we require lessees to work very closely with the university.”
OCBC's artist impression of the completed tower
CDL keen on hotel space
PDD will also boast a 200-key serviced residence or hotel at 98 Punggol Way, the same 12-storey mixed-use tower that will house OCBC Punggol.
According to JTC, the tower is complete and awaiting its Temporary Occupation Permit (TOP), like the other seven towers. The search is ongoing for parties interested in operating the serviced residence or hotel on a 60-year tenure.
“The idea is to really lease it out to somebody who can fit in with the overall theme of PDD, in terms of using smart technology, being able to integrate very well with SIT, besides providing a service to the companies within the estate,” says Liew. “There has been interest, but we are not in a hurry to make a decision.”
The Edge Singapore understands that City Developments (CDL) is keen on the lease and hopes to train students from SIT’s Hospitality and Tourism Management programme. CDL declined to comment.
A CDL-operated hotel at PDD will set it apart from other CDL hotels here and abroad, which are predominantly in the prime city and business centres.
Jones Lang LaSalle (JLL) has been appointed the managing agent for the tender exercise. JLL did not respond to The Edge Singapore’s request for comment.
“Everybody has a fair chance to participate [in the tender]. CDL [is] potentially a good fit, but we never know whether there are also other players out there that can give us the same value proposition or better,” says Liew. The space set aside for the serviced residence or hotel is expected to be ready by 1Q2025, but fit-out works by the chosen operator will likely last till the end of 2025 or 2026, adds Liew.
88 Punggol Way (pictured) stands above the main entrance of the upcoming Punggol Coast MRT Station
F&B nearly half of retail space
Retail space within PDD adds up to some 27,000 sqm in net lettable area (NLA). The proportion of pre-committed leases for retail space is “hovering around 70% to 75%”, says Liew, “and it is going up”.
According to Liew, food and beverage (F&B) stalls will take up “slightly less than half” of the total retail space.
In addition to the 12,000 SIT students who will traverse the 800m-long Campus Boulevard that bisects the current plot, JTC has enticed tenants by claiming that PDD will bring “28,000 jobs closer to residents in Punggol and the northeast region”.
The bulk of the retail space is clustered around 88 Punggol Way, near the main entrance of Punggol Coast MRT, and the eastern end of Campus Boulevard faces the Punggol Promenade Nature Walk park connector and Coney Island. This end is referred to as the Market Village.
The Market Village consists of four one-storey pavilions situated on street level with unblocked views of the waterfront and surrounding greenery. JTC is selecting up to four suitable F&B operators for the four pavilions at Market Village. Apart from indoor dining spaces, each pavilion will have its own outdoor area facing Coney Island.
Two of the four parcels have an NLA of 290 sqm indoors and 108 sqm outdoors. The largest parcel has an NLA of 570 sqm indoors and 184 sqm outdoors. The tender opened on Sept 30 and will close on Dec 16.
In a way, the waterfront focus harks back to the Punggol 21 blueprint, first unveiled in 1996 by then-Prime Minister Goh Chok Tong, who envisioned developing Punggol as “a waterfront town of the 21st century”.
PDD’s tech focus also ties in with its surrounding housing estate. Punggol Northshore was announced in 2014 as the first “nature-centric district” to test-bed smart technologies in public housing. These include an intelligent parking demand monitoring system, sensor-equipped lighting in common areas and smart waste management.
Analysts weigh in
Liew may shy away from saying that CBP could lose tenants to PDD, but analysts and market commentators The Edge Singapore spoke to are more blunt. According to Leonard Tay, Knight Frank Singapore’s head of research, the same dynamic that has created a buzz at PDD also highlights that older business parks in other locations are “increasingly losing relevance”.
They run the risk of being left behind by occupiers engaged in the business of AI, automation, robotics and the like, he adds. Tay says business parks in the Central Region, such as one-north and Alexandra Corridor, remain popular with a healthy occupancy rate of 90.3% in 3Q2024.
In comparison, business park occupancy rates in the East Region — “generally Changi Business Park” — and in the West Region were 70.9% and 59.3%, respectively, during the quarter, he adds.
“Older business parks in either the east or west of Singapore in less-accessible locations continue to struggle with workplace changes that have led to the reduction of space by occupiers,” says Tay. “Therefore, the focus should perhaps not be on PDD’s special characteristics but more on how older business parks can be kept relevant in a world that has changed significantly after the pandemic.”
However, the overall business park occupancy rate has languished under 80% for a year now, dropping to 78.4% in 4Q2023, and Tay feels Singapore’s business park sector is “uneven at the moment”.
Tricia Song, CBRE’s head of research for Southeast Asia, agrees. “The overall business park market is facing challenges, with leasing activity generally subdued. The market has to contend with a lack of significant demand drivers and consolidation activities from companies aimed at cost savings and workplace optimisation.”
However, Song is more sanguine about one-north’s prospects, which she observes has attracted other industries. “It was designed to foster innovation and collaboration across various high-tech industries such as biomedical science with Biopolis; infocomm tech with the Fusionopolis cluster; media and entertainment industry with Mediapolis; [and] start-ups and innovation with LaunchPad @ one-north and incubation spaces [at Ayer Rajah].”
While PDD is unique and its strategic focus provides it with a “competitive edge”, Song warns that it is “not completely insulated” from market dynamics affecting business parks. “[These include] slower economic conditions, [a] high fit-out cost environment, hybrid work arrangements or sector-specific challenges, such as mass-scale tech layoffs, which could also impact the demand for office and business park space and even PDD.”
The 800m-long Campus Boulevard. The bulk of retail space is clustered around 88 Punggol Way (pictured), and PacificLight Power could add rooftop solar panels to this building in the coming months
The next phase
For now, JTC’s Liew remains upbeat. “I think this is very exciting for us; it’s one of the largest business park estates that we have built in recent years, and we are quietly confident that it will be a place that is vibrant.”
He adds: “Companies, employees [and] visitors that come here will be able to experience a very different environment from a traditional workspace.”
For all the hubbub about PDD’s launch, this inaugural phase of eight towers across 12ha is but a fraction of the district’s total 50ha land size, which includes SIT’s 9ha plot.
Liew says the remaining 29ha is reserved for “future expansion”, but stops short of revealing more information. “Right now, our focus is to get the ecosystem up and running, to make this a vibrant place. To many people, Punggol is still a very new area as far as the business district is concerned. Once this is successful, we will start looking at how to expand the surrounding areas.”
For example, the curved, horseshoe-shaped buildings in JTC’s artist impressions of PDD have yet to be built, though they are slated to become business park spaces.
“What is the final building shape? Who is the end user? Is it a multi-tenant facility or a direct allocation to [an] end user? That part is still up in the air, depending on the demand in the subsequent few years,” says Liew.
Photos: JTC, Darren Soh for JTC, OCBC, CBRE, Knight Frank
Read the full cover story:
- Singapore’s first district-level smart grid could lower tenants’ power bills
- CapitaLand Ascendas REIT can weather the additional space from PDD
Read more about Punggol Digital District:
- UOB ‘making steady progress’ on upcoming fintech lab in SIT Punggol (September)
- OCBC to invest some $500 mil in Punggol Digital District, sets up SIT learning lab (September)
- EdgeProp: New business district and Cross Island Line punctuate development of North-East Region (August)
- SIT launches mangrove conservatory with $680,000 donation from Foundation of Rotary Clubs Singapore (May)
- JTC’s Punggol Digital District achieves BCA Green Mark Platinum; 17 buildings certified Green Mark Platinum (May)
- UOB to invest over $500 mil to build new global technology and innovation centre in Punggol (May 2023)
- UOB to invest more than $500 mil into innovation centre within JTC's Punggol Digital District (April 2023)
