Potential of Geylang Red Light District with Geylang Rezone Singapore

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Urban Redevelopment Authority (URA) has announced a plan to rezone portions of Geylang as Commercial/Institution. This is a proposed update to the Urban Redevelopment Authority's Master Plan.

I share my thoughts on Geylang's rezoning plans and any potential prospects for sellers and purchasers in the future. As someone who is intimately acquainted with the area, I've answered her questions below.

Since 2001, Geylang has been on my radar for outstanding property acquisitions. At the time, many thought I was insane for investing in Geylang, but I've made a profit.

I've projected for some years that Geylang's business and residential landscapes would undergo significant changes, including a rise in locational status, improved government efforts, and much more. Almost every one of them came true...

What is the Potential of Geylang for Current Property Owners after Rezone?

The URA rezone the area bounded by Geylang Road, Lorong 4, Lorong 22 Geylang and Guillemard Road from 'Residential/Institution' to a new 'Commercial/Institution' zoning, with the exception of parcels of land zoned Road, lots fronting Geylang Road, and the sports field over at Lorong 12 Geylang and Talma Road.

In brief, under the planned rezoning exercise, URA would not approve any more new residential developments inside a 14-hectare area of Geylang between Lorong 4 and Lorong 22. Existing residential developments may be maintained in their current state. Similarly, newly authorized residential developments in the region may continue with construction. The new zone is prohibited from being used for residential purposes.

The maximum plot ratio (the ratio of a building's maximum gross floor area to its total land area) will remain 2.8.

According to the URA, the explanation is as follows: "As additional residential complexes have been added to the region, there has been an increasing spillover of conflicts and friction on the ground between homeowners and the area's different uses." Thus, in cooperation with the police and other organizations, we believe that the residential community between Lorongs 4 and 22 should be rebalanced and controlled in order to minimize conflict with residential usage and preserve the area's identity."

Lower Lorongs have a greater concentration of commercial activity than higher Lorongs. The higher Lorongs have more residential enclaves than the lower Lorongs. The planned rezoning, which would exclude new residential constructions, would allow for better management of conflicts between users and will avoid spillover into adjacent regions.

Effect of Collective Sales after Rezone

The rezoning is projected to increase overall land prices in the area and stimulate collective sales.

Residential properties within the specified belt that want to undergo future renovation must adhere to the authorized uses allowed in the new commercial/institution zone.

There will be spillover effects from the specified belt to the higher Lorongs, as residential developers seeking to capitalize on future prospects in the region and adjacent redevelopment zones will need to acquire more land to construct new residential projects. And with a current plot ratio of 2.8, freehold land, and homes that are 'easier to enbloc,' developers will find Geylang very lucrative.

There are several freehold residential properties in Geylang in the higher Lorongs that are older, smaller in size, and less expensive to enbloc. Developers or investors may be interested in combining existing residential clusters via a collective sale procedure for renovation.

Given that Paya Lebar Airbase will be relocated by 2030 to allow for increased development density in the vicinity, developers will seize further possibilities in the early years for economic reasons.

I anticipate a beneficial influence on land values in this area throughout the medium to long term.

Geylang, The Center of Growth with Paya Lebar and Kallang Transformation

Will Geylang develop into a treasure for companies, particularly small and medium-sized enterprises? Most certainly yes, and I believe the government is committed to facilitating SME access to the CBD and other surrounding business centers at more reasonable rates. JurongLake District and Woodlands as commercial centers for SMEs are excellent examples of what Geylang and Paya Lebar might anticipate.

Geylang's location, only ten minutes from the CBD, Marina Bay, and city center, creates a 'big thorn on a rose' for the government. For the previous 15 years, the government has used tough measures to combat the area's many illicit activities, including illegal streetwalkers and gambling. Geylang as it is now is quite different from Geylang as it was in the past.

Both the upper and lower Lorongs are well-suited to a mix of residential and commercial purposes.

With the revised zoning, we may anticipate a significant increase in property values and rental revenues as a result of increased synergy within the region as a business center and with neighboring business hubs.

Paya Lebar's present commercial growth, proximity to Marina Bay, future Tanjong Pagar, and the abolition of Paya Lebar air base in 2030 would all contribute to Geylang's status and financial viability as the next area to live and conduct lawful business operations.

Does Geylang provide Investment Opportunities?

In 2003, homes in Geylang were valued at about $300 per square foot. In 2014, prices for older freehold homes in the neighborhood are below $1,000 per square foot. As a result, Geylang is one of the cheapest areas to live and do business in Singapore today.

The plot ratio is steady at 2.8 at the moment. However, this percentage may increase if the Paya Lebar airfield is relocated in 2030.

Geylang has four MRT stations within a 12-minute walk — the furthest being Dakota MRT. No other venue in Singapore provides this level of access. It is conveniently located near major expressways like the PIE, KPE, ECP, MCE, and CTE. Additionally, the CBD, Marina Bay, and planned Tanjong Pagar redevelopment sites are all within a 10-minute drive. Nonetheless, prices and rentals remain modest for the time being.

Conclusion

Geylang is a highly fragmented region with several diverse owners, both commercial and residential. Enbloc might be difficult for developers to work with. However, for those that succeed, the sky is the limit with upcoming condo like Zyanya Condo.

The majority of investors, including myself, have no intention of selling in the medium or even long term. It's tough to locate comparable items at reasonable costs. Recently, developers made enbloc bids but were rejected due to 'lowball' offers.

For owner occupiers, the majority of them will have lived in the neighborhood for some years and will have acquired an emotional relationship to the neighborhood. Unless and until a developer can make a very appealing collective sales proposition that takes into consideration the area's future positive growth, they will face significant obstacles.

Geylang may become a gold mine for astute and well-informed investors in the future, but for now, the location might be a land mine, particularly for rookie investors or flippers. This is a long-term game, since it will take at least ten years for the aforementioned changes to materialize.

Without a thorough awareness of the many dangers, caution should be used.

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