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Yahoo
4 days ago
- Business
- Yahoo
Rising rents put the squeeze on small businesses in Singapore: Should the Govt do more?
SINGAPORE – The clock is ticking for Nicher, a bakery serving French pastries and coffee at The Brooks, a mixed-use development near Sembawang Road. The bakery's owner, Mr Melvin Koh, 39, has decided to sell the business when his lease expires at the end of June. The former pastry chef with Marina Bay Sands says his lease will go up 15 per cent from his current rental of $5,000 if he chooses to renew it, which will make running the business unsustainable. 'Rent takes up at least 50 per cent of my total operating expenses,' said Mr Koh. 'Costs of ingredients and labour are also rising.' Mr Koh, who was charged a monthly rental of $4,500 when he started his business in 2022, is just one of a number of business owners across the island who are struggling with rising rents. The rental squeeze has driven some businesses to write publicly about their woes on social media, drawing public attention to the issue. One such business is Flor Patisserie, a cake shop in Siglap Drive. Chef-owner Heidi Tan said the landlord is raising the rent by 57 per cent, from $5,400 to $8,500, and that she intends to move out by early July. In an Instagram post on May 7, she had said rent was 'one thing that kills', calling on the Government to do more to support small businesses. View this post on Instagram A post shared by FLOR Patisserie (@flor_patisserie) On May 22, The Straits Times reported that at least five shophouse businesses in Siglap Drive have closed or are about to close because of rental hikes since 2024. Ms Grace Huang, co-founder of Neue Fit gym at Kallang Wave Mall, took to Instagram on April 30 to share her struggles with rent hikes. The 42-year-old said the lease for her 372 sq m unit will expire in December and she fears that the rental will go up. Other sports tenants around her have faced rental increases of about 20 per cent. View this post on Instagram A post shared by Grace Huang (@thehuangergames) Since she started the gym in 2018, her rent has gone up by about 57 per cent, including through the Covid-19 pandemic. She pays more than $20,000 monthly now. 'Rent makes up about 30 per cent of our total monthly overheads, which is a huge burden for any small business,' she said. 'It's money we could be using to grow our programmes, support our team, or improve our members' experience.' She employs 10 full-timers, including national athletes who have themselves trained other current and past Team Singapore representatives. 'We are a sports business in a sports mall, in what's meant to be Singapore's sporting district – and yet, we're struggling to feel supported,' she said, calling it disheartening. Business owners say rising rents are choking out small businesses here which often do not have pockets as deep as chain stores and global brands, and are less able to cope with sudden hikes. Experts ST spoke to also painted a picture of a retail environment where landlords hold most of the cards. Ms Huang said landlords should consider tenants' business performance, or how they contribute to the space, when deciding on their leases, and not apply the same rental models across the board. The Government could also consider targeted rental relief or grants for certain businesses, such as those in health, sports and wellness in the sports districts, she said. When contacted, a Kallang Wave Mall spokesperson said the current lease with Neue Fit began in 2017 and was subsequently renewed in 2022 based on 'negotiated and mutually agreed rental terms and tenure'. 'For a unit above 4,000 sq ft in size, the rental rate is well within market range,' the spokesperson said, adding that formal discussions regarding future rental rates for the current unit have not started yet. Ms Sulian Tan-Wijaya, executive director for retail and lifestyle at Savills Singapore, said many malls are owned by real estate investment trusts (Reits) where there is little room to reduce rents or incentivise desirable brands with lower rents. Prime city or suburban malls still enjoy high occupancies. For every space vacated by a weak operator, there will be more than one newcomer vying for that space, she said. Shop units owned by private strata owners were probably acquired at high prices with mortgages to service. Owners facing higher interest rates will be less likely to lower their rents, she added. She pointed out that one reason international brands can afford higher rents is that they benefit from strong supply chain networks, which bring down their costs. According to Knight Frank Research, as at the first quarter of 2025, prime retail rents in a basket of malls within the prime central region have increased by 11.8 per cent in the post-pandemic period, while prime suburban retail rents rose by 5.8 per cent. These gains follow a sharp drop in the pandemic years of 2020 and 2021, when prime retail rents fell by more than 20.2 per cent in the central region and by 8.7 per cent in the suburban region. The retail sector is expected to remain challenging in 2025, with rents likely to ease and stabilise within a modest growth range of 1 per cent to 3 per cent over the course of the year, said Knight Frank head of retail Ethan Hsu. While there have been calls for the Government to intervene to stabilise rents, Mr Hsu cautioned that intervening in market forces could lead to unintended consequences such as reduced investment in commercial property, or a decline in the quality of retail spaces due to decreased spending on maintenance. At the moment, the Code of Conduct for Leasing of Retail Premises – which landlords must voluntarily adopt – sets out leasing principles when drawing up contracts and a framework for resolving lease disputes. But Mr Hsu acknowledged that there could be scope for the Government to do more. 'For instance, the Government could consider managing the supply of F&B spaces within specific geographic areas to prevent market saturation and cannibalisation within a designated zone,' he said, adding that this will help food and beverage businesses survive better amid limited demand in the small local market. Another measure that could be considered is a tax similar to the additional buyer's stamp duty on chain F&B brands that expand too rapidly within a short period, he said. This could help moderate F&B growth to a more sustainable pace. The Singapore Tenants United For Fairness (SGTUFF), a group of more than 600 front-line business owners across the food and beverage, retail and services sectors, said targeted regulatory mechanisms could protect the viability of small businesses while balancing the interests of investors. Unregulated rent increases contribute to inflationary pressures, pushing up business costs and consumer prices, said SGTUFF in a social media post on May 2. The group argued for some form of rental regulation, including a tiered rent cap system based on attributes such as property size and location, and incentives for landlords who offer long-term and stable leases. Brand strategist Debbie Yong proposed piloting rent stabilisation in selected districts earmarked for cultural and entrepreneurial preservation. Another way is to strengthen the Code of Conduct for Leasing of Retail Premises by turning it into enforceable legislation, she said, adding that it would be a practical first step towards rebalancing the power dynamics between landlords and tenants, without compromising long-term growth. Ms Yong added that the rise in commercial rents is having a chilling effect on creativity and innovation in the F&B and retail sectors. 'As consumers, we ultimately suffer from lack of diversity and vibrancy in our dining and retail landscape,' she said. 'That, in turn, further dampens domestic demand, creating a downward spiral that undermines the very ecosystem we're trying to grow.' Source: The Straits Times © SPH Media Limited. Permission required for reproduction Discover how to enjoy other premium articles here
Straits Times
6 days ago
- Business
- Straits Times
Forum: Lessons from other cities in curbing rising commercial rents
I refer to the article 'Rising rents put the squeeze on small businesses: Should the Govt do more?' (May 26). Indeed, Singapore's small businesses are grappling with rising commercial rents, with some, like Flor Patisserie, facing steep increases of up to 57 per cent. This growing pressure reflects challenges seen in other major cities, and Singapore will need to strike a balance between market forces and sustaining its entrepreneurial ecosystem and neighbourhood identity. Taking cues from strategies employed elsewhere may offer some viable solutions. One approach is rent-to-revenue leasing, where tenants pay a percentage of their sales to landlords, instead of a fixed monthly rent. This model, used in countries like the US and Australia, fosters a more equitable risk-sharing dynamic between landlords and tenants while alleviating financial strain on emerging businesses. We could assess its suitability in Singapore with a pilot initiative in Reit-managed malls. Another method, the pop-up-to-permanent lease model, has demonstrated success in places like London's Boxpark Shoreditch. This model provides new businesses with short-term leases, with the potential to transition into longer agreements. It will enable new businesses to prove their viability while landlords reduce vacancy rates. Singapore's heritage areas could benefit from this model, supporting local entrepreneurs while preserving the character of these districts. Singapore can also evaluate the idea of a vacancy tax, which discourages landlords from leaving properties vacant. Such a policy could increase the availability of affordable commercial spaces, but would require stringent enforcement measures to prevent the loopholes that have weakened similar initiatives in cities like San Francisco. Meanwhile, we should remain cautious about direct rent controls, which led to reduced property upkeep and declining investment in Berlin. There are also emerging ideas which have potential, like community equity leases, where landlords hold small stakes in tenant businesses. This idea could be useful in targeted sectors or heritage conservation districts, but would require further refinement before broader implementation. Ultimately, a structured, phased approach would be best to sustain Singapore's vibrant small business landscape while upholding its pro-business climate and learning from global experiences. Keith Wong More on this Topic Forum: What readers are saying Join ST's Telegram channel and get the latest breaking news delivered to you.
The Star
26-05-2025
- Business
- The Star
Rising rents put the squeeze on small businesses
SINGAPORE: The clock is ticking for Nicher, a bakery serving French pastries and coffee at The Brooks, a mixed-use development near Sembawang Road. The bakery's owner, Melvin Koh, 39, has decided to sell the business when his lease expires at the end of June. The former pastry chef with Marina Bay Sands says his lease would go up 15% from his current rental of S$5,000 if he chooses to renew it, which will make running the business unsustainable. 'Rent takes up at least 50% of my total operating expenses,' said Koh. 'Costs of ingredients and labour are also increasing.' Koh, who was charged a monthly rental of S$4,500 when he started his business in 2022, is just one of a number of business owners across the island who are struggling with rising rents. The rental squeeze has driven some businesses to write publicly about their woes on social media, drawing public attention to the issue. One such business is Flor Patisserie, a cake shop in Siglap Drive. Chef-owner Heidi Tan said the landlord is raising the rent by 57%, from S$5,400 to S$8,500, and that she intends to move out by early July. In an Instagram post on May 7, she had said rent was 'one thing that kills', calling on the government to do more to support small businesses. On May 22, The Straits Times reported that at least five shophouse businesses in Siglap Drive have closed or are about to close because of rental hikes since 2024. Grace Huang, co-founder of Neue Fit gym at Kallang Wave Mall, took to Instagram on April 30 to share her struggles with rent hikes. The 42-year-old said the lease for her 372 sq m unit will expire in December and she fears that the rental will go up. Other sports tenants around her have faced rental increases of about 20%. Since she started the gym in 2018, her rent has gone up by about 57%, including through the Covid-19 pandemic. She pays more than S$20,000 monthly now. 'Rent makes up about 30% of our total monthly overheads, which is a huge burden for any small business,' she said. 'It's money we could be using to grow our programmes, support our team, or improve our members' experience.' She employs 10 full-timers, including national athletes who have themselves trained other current and past Team Singapore representatives. 'We are a sports business in a sports mall, in what's meant to be Singapore's sporting district – and yet, we're struggling to feel supported,' she said, calling it disheartening. Business owners say rising rents are choking out small businesses here which often do not have pockets as deep as chain stores and global brands, and are less able to cope with sudden hikes. Experts Straits Times spoke to also painted a picture of a retail environment where landlords hold most of the cards. Huang said landlords should consider tenants' business performance, or how they contribute to the space, when deciding on their leases, and not apply the same rental models across the board. The government could also consider targeted rental relief or grants for certain businesses, such as those in health, sports and wellness in the sports districts, she said. When contacted, a Kallang Wave Mall spokesperson said the current lease with Neue Fit began in 2017 and was subsequently renewed in 2022 based on 'negotiated and mutually agreed rental terms and tenure'. 'For a unit above 4,000 sq ft, the rental rate is well within market range,' the spokesperson said, adding that formal discussions regarding future rental rates for the current unit have not started yet. Sulian Tan-Wijaya, executive director for retail and lifestyle at Savills Singapore, said many malls are owned by real estate investment trusts where there is little room to reduce rents or incentivise desirable brands with lower rents. Prime city or suburban malls still enjoy high occupancies. — The Straits Times/ANN
AsiaOne
26-05-2025
- Business
- AsiaOne
Rising rents put the squeeze on small businesses in Singapore: Should the Govt do more?, Singapore News
SINGAPORE — The clock is ticking for Nicher, a bakery serving French pastries and coffee at The Brooks, a mixed-use development near Sembawang Road. The bakery's owner, Melvin Koh, 39, has decided to sell the business when his lease expires at the end of June. The former pastry chef with Marina Bay Sands says his lease will go up 15 per cent from his current rental of $5,000 if he chooses to renew it, which will make running the business unsustainable. "Rent takes up at least 50 per cent of my total operating expenses," said Koh. "Costs of ingredients and labour are also rising." Koh, who was charged a monthly rental of $4,500 when he started his business in 2022, is just one of a number of business owners across the island who are struggling with rising rents. The rental squeeze has driven some businesses to write publicly about their woes on social media, drawing public attention to the issue. One such business is Flor Patisserie, a cake shop in Siglap Drive. Chef-owner Heidi Tan said the landlord is raising the rent by 57 per cent, from $5,400 to $8,500, and that she intends to move out by early July. In an Instagram post on May 7, she had said rent was "one thing that kills", calling on the Government to do more to support small businesses. [embed] On May 22, The Straits Times reported that at least five shophouse businesses in Siglap Drive have closed or are about to close because of rental hikes since 2024. Grace Huang, co-founder of Neue Fit gym at Kallang Wave Mall, took to Instagram on April 30 to share her struggles with rent hikes. The 42-year-old said the lease for her 372 sq m unit will expire in December and she fears that the rental will go up. Other sports tenants around her have faced rental increases of about 20 per cent. [embed] Since she started the gym in 2018, her rent has gone up by about 57 per cent, including through the Covid-19 pandemic. She pays more than $20,000 monthly now. "Rent makes up about 30 per cent of our total monthly overheads, which is a huge burden for any small business," she said. "It's money we could be using to grow our programmes, support our team, or improve our members' experience." She employs 10 full-timers, including national athletes who have themselves trained other current and past Team Singapore representatives. Grace Huang, co-founder of Neue Fit Gym, said rent has already gone up by about 57 per cent since she started the gym in 2018. PHOTO: Taryn Ng "We are a sports business in a sports mall, in what's meant to be Singapore's sporting district — and yet, we're struggling to feel supported," she said, calling it disheartening. Business owners say rising rents are choking out small businesses here which often do not have pockets as deep as chain stores and global brands, and are less able to cope with sudden hikes. Experts ST spoke to also painted a picture of a retail environment where landlords hold most of the cards. Huang said landlords should consider tenants' business performance, or how they contribute to the space, when deciding on their leases, and not apply the same rental models across the board. The Government could also consider targeted rental relief or grants for certain businesses, such as those in health, sports and wellness in the sports districts, she said. When contacted, a Kallang Wave Mall spokesperson said the current lease with Neue Fit began in 2017 and was subsequently renewed in 2022 based on "negotiated and mutually agreed rental terms and tenure". "For a unit above 4,000 sq ft in size, the rental rate is well within market range," the spokesperson said, adding that formal discussions regarding future rental rates for the current unit have not started yet. Escalating rents Sulian Tan-Wijaya, executive director for retail and lifestyle at Savills Singapore, said many malls are owned by real estate investment trusts (Reits) where there is little room to reduce rents or incentivise desirable brands with lower rents. Prime city or suburban malls still enjoy high occupancies. For every space vacated by a weak operator, there will be more than one newcomer vying for that space, she said. Shop units owned by private strata owners were probably acquired at high prices with mortgages to service. Owners facing higher interest rates will be less likely to lower their rents, she added. She pointed out that one reason international brands can afford higher rents is that they benefit from strong supply chain networks, which bring down their costs. According to Knight Frank Research, as at the first quarter of 2025, prime retail rents in a basket of malls within the prime central region have increased by 11.8 per cent in the post-pandemic period, while prime suburban retail rents rose by 5.8 per cent. These gains follow a sharp drop in the pandemic years of 2020 and 2021, when prime retail rents fell by more than 20.2 per cent in the central region and by 8.7 per cent in the suburban region. The retail sector is expected to remain challenging in 2025, with rents likely to ease and stabilise within a modest growth range of one per cent to three per cent over the course of the year, said Knight Frank head of retail Ethan Hsu. While there have been calls for the Government to intervene to stabilise rents, Hsu cautioned that intervening in market forces could lead to unintended consequences such as reduced investment in commercial property, or a decline in the quality of retail spaces due to decreased spending on maintenance. At the moment, the Code of Conduct for Leasing of Retail Premises - which landlords must voluntarily adopt - sets out leasing principles when drawing up contracts and a framework for resolving lease disputes. Space for government support? But Hsu acknowledged that there could be scope for the Government to do more. "For instance, the Government could consider managing the supply of F&B spaces within specific geographic areas to prevent market saturation and cannibalisation within a designated zone," he said, adding that this will help food and beverage businesses survive better amid limited demand in the small local market. Another measure that could be considered is a tax similar to the additional buyer's stamp duty on chain F&B brands that expand too rapidly within a short period, he said. This could help moderate F&B growth to a more sustainable pace. The Singapore Tenants United For Fairness (SGTUFF), a group of more than 600 front-line business owners across the food and beverage, retail and services sectors, said targeted regulatory mechanisms could protect the viability of small businesses while balancing the interests of investors. Unregulated rent increases contribute to inflationary pressures, pushing up business costs and consumer prices, said SGTUFF in a social media post on May 2. The group argued for some form of rental regulation, including a tiered rent cap system based on attributes such as property size and location, and incentives for landlords who offer long-term and stable leases. Brand strategist Debbie Yong proposed piloting rent stabilisation in selected districts earmarked for cultural and entrepreneurial preservation. Another way is to strengthen the Code of Conduct for Leasing of Retail Premises by turning it into enforceable legislation, she said, adding that it would be a practical first step towards rebalancing the power dynamics between landlords and tenants, without compromising long-term growth. Yong added that the rise in commercial rents is having a chilling effect on creativity and innovation in the F&B and retail sectors. "As consumers, we ultimately suffer from lack of diversity and vibrancy in our dining and retail landscape," she said. "That, in turn, further dampens domestic demand, creating a downward spiral that undermines the very ecosystem we're trying to grow." [[nid:718320]] This article was first published in The Straits Times. Permission required for reproduction.
Singapore Law Watch
20-05-2025
- Business
- Singapore Law Watch
Can rent control protect small businesses?: Opinion
Can rent control protect small businesses?: Opinion Source: Business Times Article Date: 20 May 2025 Author: Sharon See If such a term is unpalatable in Singapore's free-market economy, then consider it 'tenant protection'. Last year, the number of food and beverage (F&B) business closures in Singapore hit a 20-year high at 3,047, and it is showing no signs of slowing. Average monthly closures in the first quarter this year are already above 300. In recent weeks, several of them have made the news: Flor Patisserie is closing its Siglap outlet after a 57 per cent hike in rent; the Cat Cafe at The Rail Mall is bowing out after facing a 50 per cent rental increase. Such eye-watering increases raise the question of how much rent is too much, and whether the government needs to intervene – even if it has espoused the merits of a free market for years. To be sure, a free market allows resources to be allocated efficiently, keeping the market competitive and preventing prices from being artificially distorted. However, a free market also engenders a competitive environment that may sometimes disadvantage smaller players. Corporations driven by greed would be inclined to maximise profit, sometimes at the expense of public interest. Of course, landlords, as investors in the commercial property, would no doubt want to seek higher returns to recover their funds, but this surely needs to be done within reasonable limits. In some cases, some landlords are even willing to leave their property empty until they have found a tenant willing to pay what they are asking for. A key question here is whether we consider small businesses as having intangible benefits for the public that are worth protecting. Recall your favourite cafes, bakeries and mom-and-pop shops. Unlike large chain stores, the shop owners are often embedded in the day-to-day running of their businesses, becoming a familiar fixture of the neighbourhood. Over the years, they not only sell their bakes and wares, but also grow into a favourite joint for neighbours, helping to foster a sense of community while adding character and charm. They are also an expression of the Singaporean entrepreneurial spirit, and their owners should be celebrated for taking the leap to start their businesses despite knowing full well the city-state's high-cost environment – from rental to manpower to ingredients. This is why, when yet another home-grown business succumbs and an international chain – whether a fast-food joint, a bubble tea store or a mala hotpot restaurant – takes over the space, or worse, if the space is then left empty, we should question if we are losing something more profound. If the idea of 'rent control' is unpalatable in Singapore's free-market economy, then consider this 'tenant protection'. Government intervention in this case would not be about protecting unviable businesses – since in this case, they have presumably been operating sustainably until a rental hike puts them out of business. Rather, the aim should be to create a fairer system that does not give errant landlords free rein to do as they please. At a time when the cost of living is elevated, ensuring rent does not spiral out of control also helps to keep a lid on prices. Some ideas to consider are imposing a percentage cap on the amount of rent increase that landlords can impose, or regulations to prevent landlords from unilaterally raising rent without prior agreement. An even lighter touch would be to only impose such regulations in special zones outside the Core Central Region or similar prime areas, so that small shops are at least given a chance to thrive in the neighbourhood. Source: The Business Times © SPH Media Limited. Permission required for reproduction. Print
