Still, the news cheered shop owners in the nearby Pearl Centre.

Mr Lo Hock Ling, who chairs its merchants' association, hopes that news of the high-density project will shore up rentals there.

Mr Albert Tan, a tailor at Pearl Centre, is already thinking further ahead: 'If there are residents, we will have more customers, they can make up a stable base of customers.'

He is also thinking of buying one of the flats in the new project.

'It would be so convenient,' he said.

Outram has two things going for it: its inner-city location and its hilly terrain, said National Development Minister Mah Bow Tan.

More homes are to be built in the central area since it is a major employment centre, Mr Mah told the House when it debated his ministry's budget yesterday.

This is one of several moves to bring jobs closer to homes.

Industrial land is also being set aside in residential areas such as Sengkang, Sembawang, Hougang and Punggol.

The Outram area, which sits at the edge of Kreta Ayer, used to have six blocks of HDB flats, which were owner-occupied, and six blocks of rental flats.

It also had the first state-built shopping complex, with a wide variety of shops, including, at one time, a supermarket.

These blocks were demolished, under the Selective En-bloc Redevelopment Scheme, and residents and shopkeepers relocated to Cantonment Road in 2001.

More details of the new high-density project are due to be announced when the Master Plan for the Central district is unveiled in June.