Countries around the world race to lay hold of a vaccine for the ravaging pandemic that has taken the lives of 1.34 million people at the time of writing, equivalent to nearly one-fifth of Singapore’s population. To date, several promising vaccines have emerged, with prominent ones by Pfizer and BioNTech procuring results of an astounding 95% success rate with few or no recorded side effects.
This spells good news for the world after almost an entire year of chaos, lockdowns and restrictions. However, the road to triumphing over COVID-19 stretches far ahead with vaccines likely to be distributed only on mass scales at the end of 2021 or 2022. Nonetheless, some good news is definitely welcomed! Let us fast forward the clock and look into the possible future of life after COVID-19, will things ever look the same again? Will life resume back to before the entire pandemic begun?
The likely answer is no.
While holiday gurus would definitely appreciate hopping on flights all around the world for leisure and party goers dancing late into the night without fear, COVID-19 has shaken things up in several areas in all areas of society and even individual behaviors and its impacts are likely here to stay for good. One of them includes the real estate scene and the behaviors of the market. We all witnessed how the virus brought some of the largest retail giants to their knees, including the recent closure of Robinsons, one of Singapore’s oldest retail brands. Apart from struggles to keep up with rapidly changing customer preference, COVID-19 was the last straw as tourist numbers fell to a near zero which formed a substantial portion of their profits. What do we learn from this?
Land might not be as much of a necessity any more for corporations today
Back in the days, owning a physical store was the only way one could establish a legitimate business. Relying on footfall and customer loyalties, brick-and-mortar shops were a necessary overhead for the showcase of merchandise and service generation. Today, some of the most successful shopping brands and platforms own not a single store for walk-in patronages, including Lazada and Shopee. The disruption of technology has turned the retail industry on its head, with the rendering of physical stores obsolete.
To push it further, these platforms offer massive variety based on price and quality, at the flick of a finger from the convenience of one’s couch. Shipped from all around the world and with majority of goods arriving from China, it is hard for local brands to compete in terms of profit margins and face eventual erosion.
Realizing this, several brands take to technology to revive and hopefully retain their competitive edge, brands including major fashion brands such as Zalora and Zara. The imposition of the Circuit Breaker to curb the pandemic back in April thru mid-June, several businesses were punished with cashflows reaching zilch, which proved to a major learning point for businesses who have yet to jump on the technology bandwagon.
This spells an imminent danger for landlords of commercial properties. While it can be argued that a shopping experience in-person still has an appeal, cost is often at the forefront of a customer’s decision making. In-store merchandise and services often embody some percentage of the monthly rental cost. While the shopper’s experience is not something that online stores can rival yet, cost considerations would likely take first place.
Apart from the sales and merchandise industry, the future of office spaces is currently widely debated by analysts, check out our previous article on what we think might unfold.
Reduction in BTO delays, potential cool for resale market bull run
Several couples and families have substituted their BTO plans with a choice pick from the resale market. BTO delays came as a result of supply-chain disruptions and reduced allowable manpower at any given site due to safe distancing measures. The average wait time of BTOs spanned between 3-4 years pre-COVID, which has extended to the current 5-6. With vaccinations made available, it would mean that there can be a potential relaxation in safe distancing measures which would allow for more workers to be deployed at a given time, speeding up the overall construction time. This could then reinstate the popularity of BTO flats, rediverting some of the attention away from the currently rapidly-heating resale market.
The return of tourists, a much-needed resuscitation for the market
Singapore’s tourism dollar alone contributes to a whopping 4.1% of our GDP alone, and is one of the key motivations behind the construction of some of the fun spaces we see today including Sentosa. Sentosa was built upon reclaimed land and is home to some of Singapore’s iconic tourist sites like the Siloso beach, Integrated Resorts at Resorts World and the S.E.A Aquarium, targeted at attracting foreign visitors. This resulted in positive spillover benefits to the rest of Singapore’s citizens who get to enjoy a mini retreat and vacation without ever leaving our borders.
However, strict border controls due to COVID-19 transmissions around the world have seriously depleted tourism revenues for places such as Sentosa and the tourism industry as a whole. With hotels and resorts having to come up with innovative ways to retain minimal levels of cashflow to avoid winding up, some have gotten creative, with the launch of initiatives and packages such as ‘Work from hotel’ or ‘Daycation’. The State has also decided to lend a helping hand to boost ‘tourism’ spending amongst locals by sponsoring each Singaporean above the age of 18 with $100 worth of SingapoRediscover credits which can be used for various attractions and licensed hotels in December. While this can only be temporary band aid solution to the gaping economic disaster, the successful rolling out of vaccinations would spell promising news for the travel industry.
All in all, everyone is anticipating excitedly for the launch of a successful vaccine. 2020 has proved to be one of the most challenging and unprecedented years in the 21st century, and hopefully the procurement of a vaccination could put an end to that. Singapore’s pharmaceutical team has made leaps and bounds in her collaborated search for a suitable vaccine, with clinical trials well on its way. Currently, the effects of mask-wearing and strict safe-distancing measures seem to be paying off, with 0 reported cases on most days. Should the vaccine prove successful, Singapore’s recognition in her geopolitical sphere would see promising days ahead.