Considerations in Readapting vs Rebuilding a Real Estate Asset

How can we peel back the complexities of readapting and rebuilding real estate assets to help the built environment industry in Singapore make better informed considerations?

With the industry accountable for almost 40% of energy-related carbon emissions worldwide, there is increasing awareness of the environmental case and importance to readapt our cities’ real estate assets. Yet across Singapore, sentiments lean towards redevelopment – with the economics preferential to demolishing and rebuilding, , and according to speakers the market as of now dictating that it is cheaper option of the two. Where trends point to a preference for the brand new, how can the industry show that second hand does not mean second rate?

As part of the 2022 ULI Annual Conference in Singapore, ULI Singapore organised a workshop exploring the dichotomy between readapting and rebuilding – facilitated by Kabi Subramaniam, Regional Asset Services Leader in Arup, Stephen Bruce, Executive Director and Head of Real Estate Management from Colliers, and Viola Chee, Managing Director, Finance, at 8M Real Estate. 30 delegates from the across industry were brought together to explore considerations and challenges. Through case studies, key drivers beyond environmental factors into the commercial, governance and socio-cultural were also discussed, to catalyse stronger business cases for readapting.

Dollars and ‘sense’

Economic motivations to readapting were discussed as potential cost saving measures. According to Mr Bruce, readapting is going to cost more upfront, but the construction programme is going to be much shorter, and the property can be brought out to market quicker.

Moreover, it was raised during a discussion that we are sitting at the cusp of change, where labour and material supplies are low and are going to get more expensive over time. The investment made into new buildings by developers and investors will eventually trickle down to tenants and purchasers.

However, investors and developers would need more support and flexibility from banks. Ms Chee notes that perhaps a shift in attitudes towards green loan approvals for shophouses are needed. She notes from experience that three years ago, banks did not deem shophouses suitable for green loans because there was not much addition and alteration work that could be done. After all, repurposing an existing shophouse in and of itself is already a green act.

Ultimately, speakers acknowledge that conservations might already be happening behind closed doors. But to bring shift mindsets and reframe parameters about the economic life of a real estate asset, what the industry needs is are open, balanced and frank engagements and conversations covering multiple stakeholders’ perspectives from the groups.

ULI Singapore thanks Arup for hosting this workshop. For further enquiries, please email [email protected].