How Singapore's $50 Billion Financial District Will Change After Covid-19

Making the area more liveable was already a priority. Hybrid working has made it even more urgent.

October 7, 2021

Singapore’s glittering financial district is facing its biggest challenge yet: How to reinvent itself for a post-pandemic, hybrid-working world.

In little more than half a century, what was once a dilapidated backwater has transformed into a gleaming skyline of office towers with cameos in Hollywood action movies and blockbuster romcoms alike. It also plays host to a financial hub managing assets worth S$4.7 trillion ($3.5 trillion) as of last year.

But the office-based employment model that underpins its existence is under threat. Even before fresh Covid-19 restrictions were imposed on Sep. 27, Singapore was taking a cautious approach to reopening; despite having one of the world’s highest vaccination rates, the city-state’s return to the office has been slow. Workplace activity was down 25% as of the last week of September compared to pre-pandemic levels, according to Google mobility data. The decline in rival Asian financial hub Hong Kong was 7%.

Turning Singapore’s central business district into a more attractive place to live as well as work was already on the agenda for city planners. That need has only become more urgent since the pandemic — as has the demand for more housing to support a growing population. Plans to draw new residents and businesses to the area include adding more amenities such as supermarkets and coffee shops, and encouraging a more vibrant bar and restaurant scene.

The stakes are especially high for Singapore. Its economic success depends upon retaining the appeal to top foreign firms of the business district — currently worth over $50 billion, according to a Bloomberg analysis of top-flight offices in developers’ financial reports.

“Past definitions of a successful business and financial district are no longer relevant,” said a spokesperson from the Urban Redevelopment Authority, a government agency that oversees the city-state’s urban planning.

“The portrait of a successful CBD today is strikingly different from the mono-use office districts of yesteryear.”

When it comes to after-hours attractions, Singapore is playing catch-up with other global cities. In London, office workers can re-charge in the restaurants and shops of Leadenhall Market, while night owls in Hong Kong’s financial district have a host of bars and clubs close at hand. On New York’s Wall Street, bankers and visitors can stroll to the nearby seaport for some live music or enjoy the sunset in Battery Park.

But progress is being made. In 2019, Singapore’s government introduced a scheme to encourage building owners to convert older offices into mixed-use developments such as hotels, residences and lifestyle amenities. Authorities now also require developers to build privately owned public spaces within the compounds of office buildings. One example is The [email protected] Square, a large concourse with rows of bars catering mostly to bankers and techies, which sits between two buildings housing the likes of Citigroup Inc. and Amazon.com Inc.

Plans to bring the city to life also include more cycle paths and pedestrianized zones, making it easier to explore on foot. And Singapore is luring tech giants to the area: TikTok owner ByteDance Ltd. recently opened a huge new office in the city center and Alibaba Group Holding Ltd. is building new premises on Shenton Way, an older part of the business district that is much in need of rejuvenation.

“Failure to reinvigorate the older sections of the financial district would very soon make them irrelevant and unattractive to companies dealing with the new economy and digital finance,” said Alan Cheong, executive director of research at Savills Plc in Singapore.

The government also wants to bring public housing — the affordable apartments that house more than 80% of the city’s population — to the financial district. In a piece for the Straits Times in June, Second Minister for National Development Indranee Rajah wrote that housing in prime locations shouldn’t be restricted “only to the rich and affluent.”

Singapore’s public-housing model will need adjustments to function in such an expensive area. But there are dilemmas such as ensuring homes remain affordable and that owners aren't buying units just to cash them out, Rajah said. Authorities are currently studying the plans and consulting the public.

City-center homes may appeal particularly to younger Singaporeans, said Christine Sun, senior vice president of research and analytics at Singapore-based property firm OrangeTee & Tie. Schools, outdoor playgrounds and cheaper eateries will also be needed to cater to that demographic, she added.

Fast Growth

Singapore’s rapid development since independence in 1965 owes much to its political stability. The ruling party has enjoyed an unbroken run of power with little opposition, giving it a solid platform for long-term policy continuity. Forward planning laid the foundation for giant projects such as Marina Bay — home to the iconic Marina Bay Sands hotel — which was developed over four decades prior to opening in 2010.

“One thing that helps in having the same government is they’re very good at development,” said Richard Peiser, a professor of real estate development at Harvard University Graduate School of Design. In contrast, he added, major projects in places like the U.S. can get bogged down in the political process.

Still, the post-pandemic environment will require creative solutions, which can be a challenge in a political system dominated by one party. “Singapore’s planning regime used to be very rigid, sometimes too rigid,” said Henry Chin, CBRE Group Inc.’s head of investor thought leadership and research in Asia-Pacific. “But you see the direction changing.”

The city-state can learn from Canary Wharf, said Chin. London’s second financial district is adding luxury apartments to boost its permanent population and create more of a community. It’s also planning a science campus on a site that was once home to Deutsche Bank AG’s London headquarters, as the pandemic and Brexit sees global banks cut back their presence.

It’s a point echoed by Ada Choi, CBRE’s head of occupier research, data intelligence and management for Asia-Pacific. “If you want people to come back to offices, it’s no longer purely just for work. You need retail, food, living, fun,” she said.

“The biggest, biggest challenge is that you are not only designing the physical aspect — you have to think about the experience that you are going to have within that area.”