A cloud of uncertainty is hanging over affected funeral agencies following news that the Mount Vernon columbarium complex will have to make way for the new Bidadari estate.
The move affects some 21,000 niches there and may force two private operators out.
A smaller complex will be built to replace the current one, but it is unclear whether private operators will still be allowed to run funeral services there.
Bidadari is set to offer 10,000 new public homes and 1,000 private units, with the first few Housing Board flats to be ready in 2015.
The existing Mount Vernon complex "will be cleared to make way" for the project, said the National Environment Agency (NEA) and the HDB in a joint statement.
Part of the site has been set aside for a "new and modern" Mount Vernon Funeral Parlour.
This facility will be well-integrated into the surroundings to "minimise the visual impact on nearby residential buildings" and will also "serve as an extension of the park greenery".
Its development and operation will be decided at a later date.
The affected niches will be relocated to three government- managed columbariums - Mandai, Choa Chu Kang and Yishun.
Members of the public will be given two years' notice by the NEA before relocation, to submit a claim for the remains and register for the new niches.
Nestled amid lush greenery, the existing Mount Vernon compound also houses eight funeral parlour halls for wakes, run by two private operators.
One of them is Mount Vernon Sanctuary, which opened in 2010 and now runs six halls. Its managing director Ang Ziqian is worried about the future of the business.
The funeral parlour has managed to "gain acceptance" from the community in its three short years of operations, he said, adding that $700,000 has also been invested for renovation.
"Right now, we are waiting for more details from the authorities before deciding on our next move," he said.
The other affected private operator is Singapore Caskets. Its assistant sales and marketing manager Jeffrey Lee said it will have to move out of Mount Vernon once its contract ends next year.
It will have to rely on its other funeral parlours in Lavender. But these are often fully booked and "demand is higher than ever", said Mr Lee.
Some members of the public hope that the historical character of the complex will be preserved, such as the nine-storey pagoda that houses some niches.
Mrs Judy Pang, 58, whose late mother's ashes have been kept there for the past decade, said her family will miss its space and serenity.
"The children like to explore the grassy areas," said the housewife in Mandarin. "For the older folk, it is also a nice place to stroll around and chat."