“we have seen the equivalent of 5 years of consumer and business digital adoption in just 8 weeks since the COVID pandemic started.”Quote from Deputy Prime Minister Heng Swee Keat
If there is anything we learn from COVID-19, it would be that life is predictable. Our nation narrowly avoided recession in 2019 and was poised for recovery. Our real estate market was springing back into life after two quarters of decrease (Q4 2018, Q1 2019). 2020 was looking to be a great year.
But it all went downhill with the first infected tourist arriving in our borders back in 23 January 2020. And life as we know it would never be the same again, which our Government constantly reminded us during the past two months of Circuit breaker. And it is definitely not an easy time. I recount some of my clients who are business owners telling me that they are doing their best to keep their business afloat, hence real estate is nowhere near their minds.
Others who are fully employed were concerned about taking a pay cut, or even losing their livelihood altogether. (Not everyone is suffering. I do have clients in the medical, e-commerce, FMCG and other industries who are reportedly doing phenomenally well. The Government sector are also pretty intact, albeit very busy due to all the policies, packages and relief measures being launched by the Government in the past few months.)
Our Deputy Prime Minister Heng Swee Keat announced the fourth budget, a $33 billion supplementary package on 26 May 2020, aimed primarily at helping workers and businesses to tide over the COVID-19 crisis. (Abstract of the transcript at the bottom of this article)
Of everything that was spoken by our Minister, one thing stood out to me – Digital Adoption. Minister Heng shared the findings of the McKinsey studies of how Singapore on a national level, accelerated five years worth of digital adoption in just eight weeks.
This is actually quite extraordinary. In our personal lives, we made countless digital payments on food delivery apps (Grabfood, Foodpanda, Deliveroo), bought our groceries online, subscribed to online music and video platforms (Youtube Premium, Netflix, Spotify), shopped online, did some adulting by paying all our bills online, and tried to stay in shape via online platforms (Youtube, Zoom, online fitness apps).
In the marketplace, we were forced to adapt to digitalisation. Work-From-Home meetings are now held online via Zoom, Facebook and Cisco platforms. Apart from digitalising the mode of payment, businesses had to digitalise their whole entire mode of conducting business. For those who are surviving, business models must and have been tweaked. Even my mom have to learn how to use Cisco online meetings for her company meetings – at the age of 57 (Laughs).
For all the pain and anguish that the COVID-19 has caused Singapore and the world-at-large, it has shown us that we are nowhere close to claiming that title of being one of the most technologically advance nations (like China) that we believed ourselves to be. There is a saying that you could survive in China without having a single physical dollar note with you, because everything can be paid with Alipay or WeChat Pay! Purchasing property with simple images and video tours were already becoming a norm. And even beggars prefer donations via these online payment methods!
On 1 June 2020, Forbes published an article with the title ‘When Digital Transformation Is The Only Way‘, and Computer Weekly published an article with the title ‘Digital transformation held back by lack of skilled people‘. Unfortunately, the byproduct of the pandemic are the many businesses and jobs that were lost and shuttered. Yet, these events were bound to happen sooner or later, as our country pursue digital transformation. As we transition away from the manufacturing world into a digital one, some businesses and jobs would have to be phased out.
What about current state of Singapore’s real estate industry? Replacing traditional physical viewing of actual units and showflat, agents marketing resale flats and developer sale private residential properties went online to promote their properties. Images are not enough to seal the deal. Agents relied on video and virtual 360 tours to market these properties, and discussions were done on Zoom. Property seminars and open houses were also held on Zoom.
April’s resale HDB transaction volume falls 78.3% from March to a record low. Private resale transaction volumes also took a 57.3% hit. This was expected as buyers are not accustomed to purchasing a property without the traditional ‘see, feel, touch’.
277 developer sale units were transacted in April, of which 100 was transacted after the start of the Circuit breaker – the worst result recorded since the 108 transacted units in January 2009. However, more than 230 developer sale units were transacted in May 2020. All this, without viewing a physical showflat.
Some of my clients who are looking at properties again expressly told me that this is the best time to enter the market, for there would be good deals especially during this down market. I couldn’t agree more. Nobody makes a huge profit during an up market, isn’t it?
What is the future of Singapore’s real estate then? While the industry as a whole is forced to level up and digitalise, many real estate agents who cannot adapt will leave the industry. And some new and brave aspiring agents unscathed by the previous agents’ problems will still take a brave leap into this trade. Video and virtual tours as well as Zoom meetings will become a norm.
And importantly, real estate agents cannot be ‘buy-sell’ agents anymore. Agents would have to upgrade their skillsets to provide greater value to their clients. As a whole, this is actually good for the industry.
As for property transactions, buyers will have to adapt to purchasing or renting properties without looking at the physical unit. One client told me over a Zoom meeting, “After all, HDB BTO buyers were already purchasing their HDB flats just by looking at the floor plan. So purchasing properties especially developer new launches without seeing showflats could become more common because the buyers would know that everything is brand new, with no problems that would usually come with resale properties.”
We are probably going to see property price trends flatline for the rest of the year. Yet the strong fundamentals of Singapore has and will always deliver through. After every past crises, our property market is resilient enough to pick up from where it left off and even surpassing past peaks. Hence, it is my opinion that we could see the property market recover as early as beginning of 2021, bar the resurgence of the COVID-19 virus.
If anything, this pandemic also taught us that paying extra for the view or amenities is very important. When you are trapped at home during another Circuit breaker, all of a sudden, your daily – pool, river, park, unblocked city, sea or nature – view becomes gold. For some outdoor nature enthusiasts like me, staying near to a nature park is a huge incentive. For others, staying near to (many) eateries gives variety and also helps to eliminate the delivery cost increase issue.
To end, this virus episode is a long drawn one as we are told, and will come back again and again in the future. Our business need to recalibrate, our lifestyles need to recalibrate, my real estate industry needs to recalibrate, and property buyers need to recalibrate. Pandemic or not, we will still need a roof over our heads.
This article is inspired by conversations with my clients; Anqi, Bill, Doreen, Esther, Eileen, Eugene, Grace, Isabel, Jinxian, Jun Jie, Ryan, Soo May, Vivian, Yiping and Yvonne. RET
“The Emerging Stronger Taskforce is currently studying two key shifts, the rise of digital transformation and a decline in support for Globalisation, and shifts in global supply chains. Two shifts were already taking place, but COVID-19 has accelerated them. Our businesses must adapt, I will support them in this.
Building on the momentum of digital transformation, the first key shift is in the digital transformation. We’ll not go back to our old ways. Digital solutions become more deeply embedded in our lives. Telecommuting, online food and services, and virtual events are now the norm.
A McKinsey studies shows that we have seen the equivalent of 5 years of consumer and business digital adoption in just 8 weeks since the COVID pandemic started. Indeed, COVID-19 has done what many CEOs and CTOs found hard to do; accelerate digitalisation.”
Got a question? Contact Reuel Eugene Tay at +65 9833 6450 for a real estate discussion.
The Straits Times, $33b set aside in Fortitude Budget, 26 May 2020
The Straits Times, First COVID-19 suspect patient in Singapore, 4 Jan 2020
April condo resale volume dives 57.3% amid circuit breaker
HDB resale volume falls 78% to record low
Computer Weekly, Digital transformation held back by lack of skilled people, 2 Jun 2020
When Digital Transformation Is The Only Way