Yishun land sale may entrench Frasers local monopoly


Property analysts were reportedly stunned by a bid of S$1.43 billion for a land parcel in Yishun town centre, submitted by companies from the Frasers Centrepoint group. It was 47.4 percent above the second-highest bid of S$969 million from a Far East Organisation-led consortium. There were three other bids, at S$930 million, S$875 million and S$705 million.

The most likely reason soon became clear. As owners of Northpoint, adjacent to the site, and the only significant shopping mall in Yishun town centre, Frasers Centrepoint would want to dominate the market for retail space in the locality. But such domination would mean, in effect, a local monopoly.

Competition rules should have kicked in. Frasers Centrepoint should not have been considered eligible for bidding.

The 99-year leasehold site was put up for tender by the Housing and Development Board (HDB) in June. Diagonally across Yishun Avenue 2 from Yishun MRT Station, it is roughly where the existing bus interchange is. The site use is for a mixed commercial and residential development, with a Gross Floor Area of 123,254 sq metres. Of this, about 48,500 sq metres can be for commercial use. The development, however, must include a new bus interchange and a community club.


The site is a huge one, and interested parties must be confident that they can handle a project of such scale. Together with the complexity of the requirement (incorporating a bus interchange and community club), analysts say this is the possible reason why it attracted only five bidders.

How huge can be seen from the map provided by HDB. Compare the area delineated in red with nearby Northpoint Shopping Centre.


There’s goes a chunk of the park

I said to myself:  That’s funny, I don’t remember there being such a large piece of land there, even allowing for a bus terminal. So I took a look at Onemap.sg, and was disappointed to see that the land parcel ate up about 30 percent of the existing Yishun Town Park.  Another 10 percent of the park is marked as “proposed town plaza”. In the map below, I overlaid the tendered parcel (broken red lines) over Onemap. The existing town park is outlined in green. A good part of it, as you can see, is within the tendered land parcel.


The steady reduction of green spaces is a reason why many Singaporeans complain of feeling boxed in.

Windfall profits mean pain in the average guy’s pocket

Although Frasers Centrepoint put in the highest bid, HDB has not yet announced the result. However, it is very likely that they will accept their bid.

Today newspaper quoted Ku Swee Yong, Chief Executive Officer of International Property Advisor, as saying,  “Frasers will enjoy many synergies and besides the heavy footfall in the area, they will be able to drive traffic to their Northpoint to increase returns,” explaining their high bid. But this means that to secure an economic return on their astounding bid, they’d have to keep rents for commercial spaces high. Who suffers? Small businesses. Consumers. Everyone in Yishun.

 Northpoint figures: Source

Northpoint figures: Source

There is no other significant shopping centre in the area. Nor do current plans (see the black-and-white map above) make any provision for new shopping malls for the foreseeable future. In any case, given the more-than-double increase in commercial space (see box at right), it might not make economic sense to build another mall in Yishun for a long while to come. Given this scenario, it seems quite contrary to the public interest to permit a single landlord to so dominate a town centre with respect to modern retail space. Thus my argument that competition rules should come into play, barring this developer from the site.

Whoopee, our government will get richer

A counter argument is that it would be perverse for the government to lose out on an extra $461 million — the difference between Frasers Centerpoint’s and the second highest bid — by rejecting the top bid. But that in itself illustrates the kind of warped priorities we labour under. Is it always a good thing for the government to get richer and richer?

The cash will be sucked into state reserves — that’s a principle that the government applies. Land is a state asset and any value obtained from monetising it goes into state reserves, not the operating budget. Given the practice so far, the reserves will be entrusted to either the Government of Singapore Investment Corporation or Temasek Holdings to invest, and both will likely move the money offshore in doing so. Outside of the inescapable debate as to whether they make a hash of such investments, the fact will remain that by sucking an extra $461 million out of Singapore, there will be a deflationary impact.


Meanwhile Yishun residents shopping in Northpoint and the new mall will pay higher prices to help tenants pay higher rents, for without leasing competition, shopkeepers can’t negotiate for more reasonable rates. So what will happen, in a nutshell, is that money will flow from the pockets of Yishun residents to shopkeepers, to the landlord, to the government, to GSIC and Temasek, and then out of Singapore. Only a small part of future investment returns from GSIC and Temasek  is going to return as government expenditure and feed back into our domestic economy.

Seen in this light, the counter argument stinks.

Crank up competition law

On a more general note, either our competition law is weakly worded or we’re too laid back about enforcement. There are so many areas where we should be battling market dominance or duopolies, from mainstream media to taxi companies to telcos. That however, is a subject for a different day. What this case shows — and why I feel it important to draw readers’ attention to it — is that we shouldn’t only speak of market dominance Singapore-wide. Localised dominance can be just as damaging to consumer and commercial tenants’ choice.

We need a heightened and more fine-grained appreciation of competition rules.

16 Responses to “Yishun land sale may entrench Frasers local monopoly”

  1. 1 ;Annonymous 9 September 2013 at 12:18

    When there is a windfall for the government competition will simply have to give way. Only a “dumb government” (quoting the great man) will refuse the largesse which will be translated into GDP growth, into goodies for you know whom. Apart from your observations there is another. In the 1970s Ng Teng Fong tendered for every available plot of land In the Cecil Street and Orchard areas, often putting in record tenders. The net result of his successful tenders is to drive up the prices of his existing properties in those areas. He was then able to get more bank loans based on the increased values.

  2. 2 gillard 9 September 2013 at 12:31

    That’s why it is important to break PAP’s dominance in parliament. Once you break that, all other monopolies and duopolies will be removed since these are either government linked or familee linked in nature. Ask LHY why he is CEO of F&N and why switch from selling beverage to developing properties? Good deal? Of course, when the “cooling” measures are designed to not work.

    • 3 yawningbread 9 September 2013 at 12:51

      I’m quite sure it is possible to get a more vigilant and active competition watchdog without changing governments. No need to morph every subject into one of PAP versus anti-PAP.

      • 4 gillard 9 September 2013 at 14:01

        What do u think about NTUC linked CASE? Is it effective or is it a facade? Why YGK is in charge? Why is he holding on to so many other concurrent positions in various companies? Is IPS independant? Many things are linked. It would be naive to ignore these and just look at the trees without looking at the forest.

      • 5 andyxianwong 9 September 2013 at 21:56

        To what extent though do you see a lack of competition flowing from political decisions? Consolidation of power is hardly an alien concept to the ruling party. Is the current government independent enough of the local economy and corporations to risk unleasing the “creative destruction” of increased competition. Last time I checked, more than half of the STI 30 had the state – usually through TH or GIC – as the largest shareholder. These are entities with a lot to lose from increased competition and wouldn’t want to give it up without a fight. They are also not exactly famed for political independence. GIC for example is chaired by the PM himself.

        That said, it would be naive to think that this situation would suddenly go away with a new government. Only a government that actually sees this as a problem and something to change is likely to, for example, set up a powerful and independent competition regulator. How many of our opposition parties are asking these questions? The last thing we want is a new PM who installs himself and his wife as chairman / ceo of GIC / TH and keeps things as they are.

      • 6 gillard 10 September 2013 at 00:35

        I would rather take my chance to vote for the unknown than stick to the current nepotism and cronyism which we already know. Just that the 60% are either clueless or gutless.

  3. 7 Kim 9 September 2013 at 15:23

    Also, note that HDB one-room flats at Viking Road, near Redhill MRT was enbloc and these apartments demolished and some years down the road, the land was sold off to private developers to build condos. Privatising of what used to be land on which the poorer of us live on.

    Public swimming pools – instead of being upgraded(slides and tidal waves) to attract public users, parts of the facilities are rented out to private gyms, kindergartens. Case in point: swimming pool next to Bukit Merah Interchange. See how large upgraded pools (Jurong East) are overcrowded. No doubt this is under SSC and they are trying make money in this way, following the way of the higher ups.These areas for the public also shrink.

    Although to be fair, kudos for the Green Corridors.

  4. 8 Humph 9 September 2013 at 19:23

    Frasers Centrepoint Ltd is going to have its IPO on SGX soon.

    I’ve lived in Yishun for 20+ years, and have been crying harder every time a piece of land gets swallowed up for “development”. The parcel marked “reserve site for future high rise development” next to Yishun Pond used to see families picnicking and flying kites there. That added life and colour and a sense of community which isn’t manufactured by “grassroots leaders”. Kite flying has now been disallowed because it threatens air safety of the new aerospace park.

    Do a quick search of rental ads, and you’ll see pages and pages of units for rent in Yishun, a number of them specifying they will only accept Filipino/Indian/Malaysian/(insert your fav non-sg nationality here) tenants. Some puzzling ads even go as far as to state “no locals”.

    I’m sorry, but I don’t see how the latest developments better my life here. Chong Pang seems to be the last bastion of Heartland Yishun. Please don’t take that away from me at some point too.

  5. 9 R 10 September 2013 at 00:04

    Thanks for the interesting arguments you put forth.

    To what extent will prices be raised because of a local monopoly on commercial space? Surely small businesses, if they cannot afford higher rents, will move to other shopping malls in Singapore. Perhaps only the businesses which will stay put in the long run are the ones which sell products only Yishun residents will buy. Are there many of these shops?

    I am not so sure if prices will rise, or the businesses will move out and Frasers ultimately lowers rents.

    • 10 yawningbread 10 September 2013 at 00:33

      For certain types of goods of services, people may be prepared to go some distance to purchase. For other kinds of goods and services, e.g. groceries, haircuts, memory storage cards, buy take-out dinner on the way home after alighting the train, people need shorter distances from home. It’s too facile to say too bad, retailers who cannot pay the rent can move to another suburb to operate. The point is, there is always going to be demand within Yishun. Retailers selling goods and services for which people aren’t prepared to travel can raise prices to cover their higher rents. So eventually it’s the consumers/residents of Yishun and the buyers of whatever apartments are built as part of the development who are going to pay up the $1.43 billion.

      It sounds as if you are not convinced that monopoly situations (without a robust regulator) are prima facie against the public interest. It’s a well-accepted fact; I didn’t think I’d have to get down to such economic basics.

      • 11 Megaphone 12 September 2013 at 07:28

        I schedule my groceries, haircut and whatever activities together so that I can reduce transport time and cost. Singapore is too small for a single landlord to dictate rental price. Not to mention that online shopping is increasingly replacing physical shopping.

        IMHO, I think the bigger concern should be on groceries as currently there are two dominant players who seem to be colluding on prices. A typical family of four spends easily $6000 – 8000 p.a. on groceries.

        Of course the elephant in the room is residential property, which is by far the dominant flow of wealth from commoners to govt.

  6. 12 seven 10 September 2013 at 04:09

    part of a park is going and you’re upset, alex. totally appreciate how you feel, but that is just minor to what’s on the cards – the removal of All secondary forest on this island. by 2030.

    the forests at pasir ris are just about gone. the death knell has sounded for bukit brown. everything else will follow. as is, too many shady trees that line roads are being replaced by palms.

    in fact, gardens are disappearing, as plots for bungalows are having 2 and more houses built on them. each has a dab of green, if it’s not paved over to make it easier to maintain. the old fruit trees in these gardens are being cleared.

    it’s like something out of the horror scifi stories of life in the future that I used to read. stories where people live underground (a direction this govt wants to head in), as the heat above ground is unbearable – because of the removal of greenery. it’s enough to make you cry.

  7. 13 Kelvin Tan Tuan Wei 11 September 2013 at 10:17

    Many Singaporeans like to harp on rising rentals with all these REITs monopolizing the management of malls but they are missing the bigger picture.

    If you want to open any retail establishment, whether food or others, would you rather pay a low rent but have fewer customer traffic or a high rent but higher customer traffic?

    Thus, a better indicator is “occupancy cost” which is the ratio of rental fees and the sales revenue. I am not too sure about Fraiser Centerpoint trust’s occupancy cost but I do know that CapitaMall trust’s occupancy cost is competitive with malls from other countries. I am quite certain that FCT, being as profitable as CMT, would have similar occupancy cost for her malls.

    To illustrate with an example, if you want to open a retail firm, and Peninsula Plaza and Pearl Center is offering a much lower rental than IMM or Bugis+, do you really think its necessarily better for your bottom line to choose the lower rental option? That is why the importance of having good management comes in, an established manager like Fraiser or Capmalls will do more for your business than others.

    • 14 yawningbread 11 September 2013 at 10:32

      The issue is not one of comparing a mall in Yishun versus a mall somewhere else. As I mentioned in an earlier comment reply, if a business wants to set up in Yishun, it is faced with a quasi-monopoly landlord. If Frasers one day does not deliver good occupancy cost, this small business has still no choice but to live with it. Circumscribing choice, and the possibility of a landlord abusing his position to extract windfall profit is the issue.

      • 15 yuen 11 September 2013 at 10:55

        these days car ownership is high so consumers are more mobile; shops and shoppers can choose to go elsewhere if rents and prices are too high in one location, leaving the local landlords and shops with the less mobile and less well off population

        at least consciously, the landlord companies that seek dominance in a particular locality would be doing it out of other motives than monopoly, e.g., administrative simplicity, cost benefit of proximity, etc

        those concerned about rising costs ought to pay more attention to the commercialization phenomenon whereby organizations like JTC whose original mission was to provide affordable premises for factories, offices and shops, allow established assets to come under real estate investment trusts, whose missions are very different

  8. 16 Wikigam 17 September 2013 at 09:43

    Do not blame all fault to PAP or LKY.
    We must agree that without LKY , it mean that without ‘Today’s Singapore ‘

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