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The CBD Incentive (CBDI) Scheme was first launched in 2019 and has recently been extended through 2030 as CBDI 2.0. This scheme goes beyond being just a policy for landlords; for occupiers, it is a catalyst that will shape their future in the city core.

The ultimate goal of the scheme is to transform the CBD into a round-the-clock mixed-use precinct that balances commercial activity with residential and lifestyle amenities. It encourages owners to replace ageing office towers with integrated developments that foster live-work communities and improve overall connectivity.

JLL Research reports that the scheme affects 16% of the CBD’s total office inventory, with over 25 buildings totaling approximately 6.4 million sq ft qualifying under the framework. This includes the recent divestment of Citadines Raffles Place at CapitaSpring for $280 million by CICT and their joint venture partners.

For business leaders, it is crucial to understand the ripple effects of this transformation, rather than focusing solely on the policy details. The experiences of other world-class cities that have undergone a similar renewal offer a valuable playbook, helping businesses turn a potential disruption into a strategic advantage.

The Ripple Effect: How a Landlord’s Incentive Becomes an Occupier’s Reality

The logic behind this transformation is clear. According to JLL Research, the buildings targeted for redevelopment under the CBDI Scheme are significantly underperforming assets. These older buildings have an average age of 42 years and smaller floor plates of under 10,000 sq ft, leading to lower rental prices of only $7.29 psf, which is 26% below the CBD average of $9.85 psf.

Hence, it is only a matter of “when” rather than “if” the owners will choose to redevelop these buildings. The CBDI Scheme is simply a catalyst to unlock the potential of these assets. While some owners may opt for significant Additions & Alterations (A&A) to modernize their buildings, the bonus plot ratio offered under the scheme makes full redevelopment a highly attractive option.

The immediate consequence of this transformation is a temporary removal of approximately 1.7 million sq ft of office supply, based on known projects leveraging the CBDI for redevelopment to date. This is followed by a permanent reduction in pure office space, with redeveloped assets expected to offer about 20% less office area in order to accommodate their new mixed-use focus.

This predictable tightening of the market accelerates the ‘flight to quality’ into a structurally smaller pool of higher-grade space. This creates a ‘double squeeze’ on older buildings, where occupiers now face the choice of accepting higher rents, moving to another ageing asset, or relocating out of the CBD. The affordability of these older buildings, with a baseline rent of around $7.29 psf, comes with a hidden risk. For many, a forced move presents a rare opportunity to ‘right-size’ and escape the constraints of an outdated layout.

Ultimately, this combination of constrained supply, escalating costs, and strategic trade-offs alters the decision-making process for every occupier. The simple question of ‘cost per square foot’ is no longer enough; instead, businesses must weigh redevelopment risk, business continuity, and brand positioning. Navigating this new reality requires a fresh perspective, one that can be gained by examining successful global examples.

Global Lessons in Navigating Transformation

While each city’s regulatory context may differ, the patterns of market transformation following major urban renewal are consistent. By looking at how similar programs have reshaped other global hubs, occupiers in Singapore can anticipate what lies ahead.

For instance, the systematic renewal of Paris’s La Défense district illustrates that a rising tide lifts all ships and raises expectations for everyone. Before its renewal, La Défense was a first-generation business district facing obsolescence. The renewal plan focused intensely on sustainability, aiming to become the world’s first “post-carbon” business district. This meant that new buildings became showcases for ESG excellence, forcing existing tenants across the district to evaluate their own environmental credentials to remain competitive.

Similarly, the rezoning of New York’s East Midtown enabled developers to purchase unused ‘air rights’ from landmarks to build significantly taller towers, such as One Vanderbilt. In exchange for this added density and improved commercial viability, they were required to fund major public infrastructure improvements, such as to the subway system. This directly links a premium corporate address with tangible benefits for employees and the public, creating a powerful branding narrative. The new towers offered not just space, but also advanced technology and a visible commitment to civic betterment. This created two distinct tiers of office accommodation, forcing companies to implicitly choose which tier aligned with their identity.

Finally, Tokyo’s approach in districts like Marunouchi highlights that urban renewal is not a one-time project but a continuous process. Its legislative framework creates “Special Urgent Urban Renaissance Areas,” rooted in a philosophy of constant improvement that allows for perpetual evolution. This creates an environment where tenants are not just leasing space, but participating in an ecosystem that is continuously improving. The expectation of excellence is constant, challenging businesses to assess if their strategy is agile enough to adapt to a perpetually evolving urban landscape, or if it is designed for a CBD that no longer exists.

Four Critical Board-Level Conversations

These global patterns confirm that an occupier’s response cannot be a simple real estate decision. It demands a series of fundamental conversations at the board level.

First, timing is everything. Businesses with a lease expiring in 18-24 months must plan now to secure the best alternatives. Those with longer leases must scrutinize their redevelopment clauses and notice periods. Waiting for a landlord’s notice erodes leverage and options just as the market tightens, shifting the advantage decisively away from the tenant.

Second, there is a conversation about vision and brand. Does the physical environment reflect a forward-looking vision or anchor it to the past? An office is a powerful, tangible statement of a company’s ambition. In a revitalized CBD, occupying an ageing asset can send a conflicting message to clients, partners, and potential investors before a single word is spoken. It poses the question: What story does our front door tell?

Next is the conversation about talent and culture. In a competitive, hybrid work-oriented talent market, is the workspace a strategic tool for attracting and retaining the best people? To justify the commute, the office must now be a destination; a place that fosters collaboration, creativity, and connection. A modern, amenity-rich environment signals that a company invests in its people’s well-being. A dated space suggests the opposite.

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Finally, there’s the conversation about risk and resilience. Is the real estate strategy resilient enough to navigate a market that is guaranteed to keep evolving? Relying on a short-term lease in a building marked for future redevelopment is a high-risk position that exposes a business to significant disruption and unforeseen costs. This conversation goes beyond lease terms; it is about ensuring business continuity and building a resilient operational footprint for the long term.

The winners in this new landscape will be those who view real estate not as a fixed cost but as a dynamic asset that must evolve with their business. Understanding the global playbook provides the foresight to do just that, confirming one thing clearly: in a city designed for perpetual evolution, the greatest risk isn’t choosing the wrong building, it’s standing still.

Tahlil Khan is the Executive Director of Leasing Advisory at JLL Singapore, while James Short is the Senior Director of Leasing Advisory at JLL Singapore.