The COVID-19 outbreak is expected to have an impact on the local economy for the next couple of quarters. As evident, Singapore's manufacturing sector has been impacted, shortly after seeing a mild recovery in late 2019. Based on recently released figures, Singapore Non-Oil Domestic Exports (NODX) declined in January 2020 as the COVID-19 outbreak has affected Singapore's key trade partners, such as China, which is Singapore's top export destination. Amidst the ongoing concerns, the Ministry of Trade and Industry (MTI) has just revised Singapore's forecasted GDP to around 0.5%, the mid-point of the estimated range of between -0.5% and 1.5%. The revised range is a downgrade for the earlier estimated range of between 0.5% and 2.5% for 2020. The impact from the novel coronavirus outbreak on Singapore's economy has already exceeded that of Severe Acute Respiratory Syndrome (SARS) back in 2003 and a recession could be on the cards. While it took four months before SARS was fully eradicated in Singapore in 2003, the COVID-19 outbreak could last longer, with a greater impact already hitting the economy.

When the DORSCON level was raised from Yellow to Orange, this caused some panic in terms of people’s everyday purchasing and behavioural patterns. The next question that arises is whether such anxiety will shift to the activities within Singapore’s real estate market. In the short-to-medium term, the hospitality, tourism, retail and food and beverage (F&B) sectors will inevitably bear the brunt of the COVID-19 outbreak. Singapore's Meetings, Incentives, Conferences and Exhibitions (MICE) sector has already experienced the heat, with numerous events getting postponed or cancelled. The Singapore Tourism Board (STB) has projected a 25% to 30% drop in visitor arrivals in 2020. This is greater than the 19% decline in visitor arrivals in 2003, when Singapore experienced the SARS outbreak.

The government has just rolled out a stabilisation and support package as part of its Budget 2020. This is aimed at helping businesses in several coronavirus-hit sectors ride out the economic fallout from the coronavirus outbreak. The tourism sector will get a property tax rebate of 30% for 2020, specifically for the accommodation and function room components of licensed hotels and serviced apartments, as well as prescribed MICE venues. Qualifying commercial properties will also get a 15% property tax rebate, of which the government urges landlords to pass onto tenants by reducing rentals. The measures will be a welcomed relief to the owners of such properties, as they will help cushion the threat of reduced net operating income levels.

In the medium-to-longer term, with sound economic fundamentals and a strong fiscal position, Singapore is well-placed to weather the storm clouds that loom ahead. In the meantime, there could be some knee-jerk reaction and some investors may lie low and look for the cues from the bigger and stronger market players. Given that real estate investment is a medium-to-long term play, it is probable that both local and international investors will view the current predicament as an opportunity rather than a death knell. The unexpected lull period arising from COVID-19 may also present a window of opportunity for building owners to push forward their enhancement works so that they are ready to pounce once the economy and market are back on track.