RETHINKING URA INCENTIVE SCHEME FOR UNDERGROUND CONNECTIVITY IN KEY URBAN AREAS

Abstract

In land-scarce Singapore, land optimisation is a strategic thrust that is achieved by reclaiming land, intensifying land use upwards and building downwards. Singapore’s city centre is envisaged to be a pedestrian-friendly district that synergises both below and aboveground land uses. To promote the growth of an extensive Underground Pedestrian Network, the URA Cash Grant Incentive Scheme (URA Scheme) for Underground Pedestrian Links (UPLs) was introduced in 2004. However, developers have yet to capitalise on the URA Scheme to undertake a UPL development. This provides the main motivation for this research. This study evaluates the feasibility of a UPL development from an integrated perspective, comprising of developers, retailers and the public. The analysis is done by developing a valuation model and conducting in-depth interviews with eight real estate experts. From a developer’s perspective, the aggregate of total development cost and subterranean land premium makes it commercially infeasible to undertake a UPL development. From a tenant’s perspective, rentals on basement two are typically lower than that on levels one to three, except in cases with direct accessibility to an MRT Station. From the public’s perspective, one would use a UPL only if it is visible, provides convenience and it is easy to navigate within the UPL. Four recommendations are proposed to encourage the development of UPLs and to enhance the URA Scheme. First, the government could undertake the construction of UPLs and sell the retail spaces to investors. Next, two proposals for the URA Scheme include an augmentation in the subsidy for UPLs and the provision of feasibility studies. Lastly, an enhancement in plot ratio could incentivise developers to undertake redevelopment or major addition and alteration works.