2 days ago
$52k bid for clinic space: Young business owners react, raising concerns over rising rent, Singapore News
Rental costs are often a major deterrent to aspiring entrepreneurs, especially for young business owners who often opt to run home-based businesses in order to avoid the financial burden of paying rent.
Reports emerged last week that I-Health Medical Holdings had successfully bid $52,188 for a unit at Block 954C Tampines Street 96 in March — the highest per square foot rent HDB has ever received for a clinic of that size.
Cases of skyrocketing rental fees are becoming an increasing concern for young business owners with physical stores, and Cakeinspiration, a specialty cake shop, is facing the same challenge.
Speaking to AsiaOne, 25-year-old Chan Kai Yang, the second-generation owner of Cakeinspiration, said that they'd recently renewed their lease and now have to fork out 40 per cent more in rent to keep their store, located in the heart of Joo Chiat. High rental fees a 'reality'
While Cakeinspiration has been operating in the Joo Chiat neighbourhood for nine years, some of their neighbours haven't been as fortunate and had to move due to even higher rental increases.
"It's sad, but it's the reality for many entrepreneurs in Singapore today," Chan said, adding that he and his wife have even considered shutting down their store and reverting to a home-based setup they'd started with.
To diversify their customer base and open up a new revenue stream, Cakeinspiration also launched Petissier, a cake brand that customises treats for pets.
Eileen Tan, co-founder of Vintagewknd, a vintage and reworked clothing brand, also shared that rent for her shop at Haji Lane has increased "a lot" with every lease renewal.
The first renewal following the Covid-19 pandemic was almost 50 per cent, and subsequent increases have been between 20 and 40 per cent, she told AsiaOne.
The high turnover rate and popularity of the Haji Lane area have contributed to the sharp spikes in rent, with prices increasing upon each renewal, she added.
The 32-year-old also shared about making the difficult decision to shut down Vintagewknd's sister store, Superwasted, saying that they were "not making enough profit" to keep the store open. Instead, Superwasted items are now sold on Vintagewknd's website and through TikTok lives. Home-based business not an option
Some business owners that AsiaOne contacted spoke about physical stores being their only option.
22-year-old Hazel Wah, owner of nail salon Eden's Atelier, said that she had no choice but to open a studio for her business as her parents were "not keen on the idea of strangers entering their home at random hours of the day".
Speaking to AsiaOne, she recounted how she had to work four part-time jobs just to afford a small studio in Golden Mile Complex at the age of 19, and that things haven't gotten any easier three years on.
To supplement her income from manicure services, Wah also began offering press-on workshops for customers keen on creating their own designs. She also regularly holds TikTok lives to sell press-on nail sets. More government support needed
Most business owners that AsiaOne contacted shared similar sentiments that support for local businesses needs to be strengthened.
Currently, there are a range of grants that local businesses can apply for, such as the Enterprise Development Grant and the Productivity Solutions Grant.
"For small businesses like ours, the process of applying for these grants is often long and complicated. We're so busy with day-to-day operations that it's hard to follow through," said Cakeinspiration's Chan.
"Larger companies can hire staff specifically to apply for and manage such benefits, but most small businesses don't have that luxury. More education and outreach would help ensure that smaller players can take advantage of the support available," he told AsiaOne, adding that hiring is another challenge for small businesses.
For Abel Poh, 25, and his fiance Nydia Syairah, 23, opening their hawker stall Alipapa Briyani at Maxwell Food Centre last year was a "go big or go home decision".
Setting up their own business was not an easy feat for the couple, who had to pool their savings together and get some help from Poh's mother, "as rentals, equipment, food supplies, electricity and gas (are) not cheap," he told AsiaOne.
While Poh declined to reveal how much they're currently paying in rent, he shared that setting up the stall cost approximately $10,000 inclusive of rental fees, with another $2,000 spent to develop menu items.
Poh also lamented the lack of support from the government and the National Environment Agency, saying that more action is needed to limit excessively high bids for hawker stalls.
For instance, a stall in Holland Driver Market & Food Centre received a bid of over $7,000 during the August 2024 tender exercise. This was significantly higher than the four other bids which ranged from $4,150 to $4,880, according to a report published by the National Environment Agency (NEA).
Suggested Eden's Atelier owner, Wah: "[The government] can offer loans or funds for start-ups like us to enable us to thrive with slightly more capital, especially for those who do not have substantial funds at a young age." Win-win model 'crucial'
Speaking to AsiaOne, Professor Sing Tien Foo from the Department of Real Estate in NUS Business School said that it is "crucial" for the government to develop a win-win model that " better aligns the interests of landlords and tenants".
Doing so would prepare both parties for larger threats ahead, such as e-commerce and cheaper shopping destinations in countries including Hong Kong and Tokyo, he added.
Prof Sing also said that there needs to be more transparent access to rent and other related data such as occupancy costs, as public rental data is too aggregated for tenants to accurately determine current market rents.
He also said that landlords' should not be justifying rental increases with rising mortgage costs and interest rates, and that they should not pass on financing costs to tenants.
Instead, market rents should depend on "location, the quality of the space, and the tenant mix, as well as market coverage and foot traffic".
Singapore Tenants United for Fairness (SGTUFF), a cooperative that advocates for frontline businesses, is calling for retail lease reforms, including a cap on rental lease renewals, which already exist in developed countries like Japan and Sweden, reported CNA.
It also proposed additional property taxes for non-local retail tenants, reduced foreign worker quotas and higher levies for foreign workers.
"We hope over the next few months, we can quickly come to some agreement (with Enterprise Singapore) on what are the right, urgent, short- and long-term measures, and start to implement some of them," said SGTUFF chairperson Terence Yow in an interview with CNA.
AsiaOne has also reached out to Singapore Tenants United for Fairness (SGTUFF) for comment.
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