Keppel Pivots Brownfield Redevelopment Projects Following Completion Keppel South Central
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Keppel’s focus on brownfield redevelopment projects will intensify after the completion of Keppel South Central, says Samuel Ng, the president of the company’s Singapore real estate division. Ng called Keppel South Central “our showpiece” while referring to the 27-story office tower, formerly called Keppel Towers, and Keppel Towers 2 (originally GE Tower), which was completed in 1991 and 1993, respectively.
Last month, Keppel announced the completion of Keppel South Central, a 33-story commercial tower that sits along Hoe Chiang Road in Singapore’s Tanjong Pagar area. The building consists of 650,000 sq ft of office, retail, and event space. Each floor has about 20,000 to 22,000 sq ft of office space, with a ceiling height of 3.2m.
Nearly half of the office and retail units in the commercial tower have been leased or are under negotiation. The first anchor tenant, a leading financial services company, has already leased two whole floors, with office tenants expected to start moving in by June.
According to Ng, the building has retail and event spaces on the ground floor, health and wellness facilities on the 5th and 6th floors, a landscaped terrace on the 18th floor, and end-of-trip amenities in Basement 1. These amenities were not part of the original Keppel Towers, but they were added to meet the standards of Grade-A office spaces.
Furthermore, Keppel has a team in place to activate the building’s event spaces. Additionally, with the help of a mobile application, tenants can connect with building management and provide direct feedback, as well as engage in events based on their interests.
Keppel South Central, a redevelopment of Keppel Towers and Keppel Towers 2, has been certified by the Building and Construction Authority (BCA) as a Green Mark Platinum Super Low Energy building. Compared to its original condition, the building now has more efficient energy consumption and reduced costs. Keppel estimates annual energy savings of 6.2 million kilowatt hours (kWh), which is equivalent to the electricity consumption of 1,300 homes in Singapore. The savings amount to about $1.8 million per year.
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Keppel used its experience from testing five new energy-efficient technologies in Keppel Bay Tower, built in 2002, to incorporate green solutions into Keppel South Central. The company leveraged a BCA grant to test these new technologies, resulting in the building becoming Singapore’s first zero-energy commercial building in 2020. According to Ng, this experience has given Keppel the knowledge to successfully apply these technologies to its other buildings worldwide.
Keppel is already planning to replicate the success of Keppel South Central in the Asia Pacific region as part of its Sustainable Urban Renewal (SUR) strategy. Ng estimated a huge number of office buildings, which were built in the 1990s or earlier, are already failing to meet the Grade-A office space standards. If nothing is done to improve them, their value will continue to decline.
According to a report by JLL in March 2024, 87% of occupiers surveyed across the Asia Pacific region will only comprise their portfolios of green-certified properties by 2030. However, the challenge is that for every 5 sq ft of demand in the APAC region, only 2 sq ft of low-carbon space are projected for development from now to 2028. This presents a significant opportunity for sustainability-focused retrofits, according to Ng.
According to Leonard Tay, head of research at Knight Frank Singapore, ageing office buildings in Singapore are typically redeveloped to recycle prime commercial land. The completion of projects like Keppel South Central comes at a time when there are no available sites for new office tower development in Singapore’s CBD. To fund the redevelopment of these brownfield projects across the region, Keppel announced the initial close of its flagship fund, the Keppel Sustainable Urban Renewal Fund (KSURF), with total funds under management of more than $2.3 billion in April.
The KSURF will target properties across the commercial, living, life sciences, hospitality, and logistics segments in Singapore, South Korea, Japan, Australia, and first-tier cities in China. According to Ng, the company stands out from other asset managers because of its in-house capability to execute renewal works. “Our operational knowledge helps us streamline the process of selecting new technologies to implement, saving in capex costs if the projected savings are not produced,” he added.
Once the fund acquires an asset, Keppel will enhance the asset, stabilize occupancy, and sell it within the fund’s seven-year lifespan. Keppel has applied its SUR initiative to eight projects across five countries. The completed projects include Park Avenue Central, a mixed-use office and retail development in Shanghai; The Kube, a four-story office building in Shanghai; and Saigon Centre, a mixed-use office and retail development in Ho Chi Minh City. Three projects remain to be completed: Ocean Financial Centre, a 43-story Grade-A office tower in Raffles Place; Inno88 Tower, a 367,210 sq ft office building in Seoul; and Kohinoor, a 1.1 million sq ft office block in Maharashtra, India.