Unsustainably high rents are a risk for landlords too

Stiffer external competition in the retail landscape should exert pressure on landlords to rein in prices.

- Sing Tien Foo

When a general practitioner (GP) offered more than $52,000 a month to rent a small HDB shop space in Tampines earlier in 2025, it triggered outrage among Singaporeans, amid worries that the supernormal rent would be passed on to patients through higher medical bills.

At roughly $93 psf, the rate was almost three times the typical winning bids for GP clinics in new estates in recent years.

A pilot scheme to evaluate bids for clinic spaces at HDB estates, rolled out in May at Bidadari, will hopefully go some way towards averting such problematic instances when neighbourhood GPs are generally in short supply, leaving residents with few alternatives.

Still, the problem appears more commonplace. While rents of shops leased directly from HDB have held steady, those of privately held HDB shops have doubled in the past year.

Recent reports of the closure of prominent local retail and F&B businesses following rent hikes have also raised concerns, including Nicher Bakery near Sembawang Road and several tenants at Parkway Parade. What’s happening here?

It’s tempting to see such developments as a simple case of cruel market forces with landlords as the villains: the highest bidder wins, while other potential tenants are pushed out. Property owners hike rents and pocket extraordinary amounts.

But the story is way more complicated. In today’s retail environment, with e-commerce encroaching on retail foot traffic and Singapore shoppers flocking to Johor Bahru or Japan, overly aggressive rent hikes can hurt landlords as much as they can hurt tenants. If high rents drive out viable operators, weaken the tenant mix, or leave prime units empty, landlords risk eroding the long-term value of their commercial property.

WHY THE HIGHER RENTS?