COVID + Recession – A Double Whammy on Real Estate?

When Circuit Breaker was declared, all hell broke loose. The number 1 question our active and past clients asked was ‘What should we do now?’

Undoubtedly, we will start to have many question marks in our heads. Will Real Estate in Singapore go through a DOUBLE WHAMMY? Will the value of my property drop? How does this affect me? Don’t worry!

Let us diagnose these questions and their impact on all sectors, in the rest of this article together.


It is said that it takes 21 days to form a new habit. What used to be impossible has become a reality – with the majority of the world now working from home. What once seems hugely challenging to implement, was implemented within weeks or days when lock-downs started happening all over the world.

The fact is that even if we were to return to work, it is likely to be progressive. The priority now is safety. We still need to do social distancing for a year or two years.

During this DC (During COVID), companies are realizing they can let people work from home. And it saves them so much money if they did not have to pay hefty rentals.

Not all businesses can work from home, I agree, there would be some degree of meetings done physically because we are all social creatures. But small-medium size businesses adapted to the wave and found ways to ensure effective meetings online, to deliver presentations in an engaging manner, learn how to ensure accountability, as well as the responsibility of staff working from home.

And now that we have a recession coming, companies will look into their books and find areas where they can cut costs – one of which is surely Office Space Rental.

Currently, the Office Rents has dropped 0.8% in the first quarter of the year and vacancies are inched up from 10.5% to 11%. So our prediction for Office Spaces is that Prices & Rentals will drop further as companies trim their budgets, and move their monies into technology to work with employees, vendors and clients from home.


In this DC, retailers that fail to transcend online will perish without the support of loyal customers. Retail space may not be as crucial as before. In addition, with uncertainty in the job market, companies are cutting internships, stopping their hiring and laying off people. Consumers are also shopping less and saving up their money for the rainy days that are now upon us.

Retail shops will suffer because of the exorbitant rentals as their major overheads. Instead, most retail may move towards online stores – in fact, we have already seen this trend occur for some time, as many sales platforms (i.e., and different shop brands started popping up all over the Internet.

However, F&B businesses face a different challenge – as people cut down on expenses, they avoid eating out and cook at home. There are also alternatives such as home-based F&B businesses – with private operators working from the comforts of their homes.

What many businesses will start having more of are distribution centers and also stronger logistics support – for delivering goods and receiving goods.


This brings me to my next point – Industrial spaces demand will surge as distribution centers around the island is needed for warehousing the goods, for a couple of people to pack and send out items.

Will the price increase very much?


While there is more demand, there has been a great supply of industrial spaces all over the island for the past years with more upcoming.

Moreover, at this moment, there is 10.8% vacancy and a dip of rental prices index by 0.1%. As small and medium enterprises move out of these unofficial office spaces into their own homes, they may choose to sublet their current unit out at lower prices or end their lease, so there will be plenty of empty units.


And now, the one that is closest to all our hearts – our homes, or investment properties.

As people shift towards home-based learning, work-from-home arrangements and their businesses shifts towards distribution or logistics, the definition of home will change.

What used to be simply a sanctuary must now be multi-functional and the petite houses built by developers will no longer be acceptable.

As a result, larger houses will continue to be in huge demand, with slightly older properties leading the way due to its lower price range.

We are likely to start to see more multi-family homes being built, for example, 2 landed properties next to each other with common amenities. Prices of smaller houses will likely drop, as they are used mostly for investment.

As the companies cut costs, one of the trends in the past markets is the layoff of foreign employees. Moreover, thanks to COVID-19, companies with the capabilities to do work-from-home arrangements might solidify a major trend in the near future – Remote Working. Potentially, this may significantly reduce the number of expatriates in our country.

The balancing force is the government, who has been aggressively attracting companies to establish themselves in Singapore with the lure of low taxes, a safe environment, and Singapore’s  position as the gateway to Asia. The policies they implement in DC in comparison to other countries will either help assure or deter peoples’ want to move here for work, start their businesses here or even live here permanently.

We also reviewed past trends in Singapore Property Market by plotting charts using the data from URA, and tracing the timeline for major events.  (Reference below for a simplified version)

We noticed that prices did slope downwards in all the past crises.

However, in the last 10 years, the government did implement several policies to prevent speculation as well as over-leveraging on loans – such as Total Debt Servicing Ratio, Mortgage Servicing Ratio and even Additional Buyer’s Stamp Duty for the 2nd and subsequent properties.

These are good measures put in place to also prevent the property prices from rising too quickly or in the times of crisis, dropping too drastically.


For all categories, no. Unless there is an urgent need or the property is undervalue.

For Office, Retail and Single-use Industrial spaces, if the economy gets bad enough, there could potentially be a change of use initiated by the government to maximize the amount of space left empty and to cater to changing distribution needs.

As for Residential – People still need a home, a roof over their heads; so this segment would be safer to venture into in the next few years for investment if the price is right. However, we recommend that this is done only with excess cash and not your rainy-day funds for your family or business.

And so, in a situation where you are looking to venture into the market, now is not the time for a wait-and-see approach.

I quote:

“When Opportunity Comes, it’s Too Late to Prepare.” – John Wooden

There is no better time than now to review your current portfolio and decide what to let go now and monitor the market.

The market won’t wait for anyone so time to start spotting areas you want to focus on, down to the properties you want and deciding the magic number for you to re-enter the market.

Luck is what happens when preparation meets opportunity.

To create your own luck, these are a few action steps you can take.

(1) Check On Your Re-financing Interest & Lock In Period

I nearly had a heart attack when I met this owner in Bukit Timah who was still on a 5% interest rate bank loan. We have been enjoying the lowest rates of 1.7% to 2% for a mortgage for years and here he was paying 5%!

If he had known about it earlier, he could have saved $2400 per month!

After I advised him, he realized that he did not need to sell his property after all. No doubt I was a little sad not to get the sales, but as someone who is happy to see her clients get the best out of their properties, I’m glad he is not losing money anymore.

Check also for your lock in period so that you may time the exit of your property without incurring too much extra costs.

Check with your bank consultant or get a list of reliable bank consultants from us to compare refinancing loans.

(2) Check on Your Current Property
(a) Capital Gains Maximization

Has the price been growing in the last few years?

If no, your property is stagnant. Has it stagnated for years? Is there still room for growth?

(b) Rentals Optimization

Is the rental still going strong? Is your rental recession-proof? (Yes, there are ways to optimize rentals even during a downturn!

All in all, is this crisis simply a time for you to hold on for the next 10 years before you let it go? OR is it a better idea for you to cash out and wait for an opportunity to re-enter?

Just like our health, we need regular checks to look into the health of our current property.

(3) Check Your Options

What are the other areas you have been looking out for your own home or investments?

For Homeowners, should you sell and rent for the time being?

For Investors, is there a place with better capital gain or rental yield?

Are there properties in the market with great potential growth of at least 6-digit in the AFTER COVID (AC) period or with consistently better rentals than your current property?

For those with a longer term perspective, are there properties with huge opportunity for En-bloc in the next cycle?

Let us know if you need some help navigating these deep seas!

Wishing you the best of luck in the upcoming year!

For your reading pleasure, these are the references I drew information from:

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