Government Boost Hdb Shop Supply Amid Rising Rents

You may have heard about the increasing demand for retail services and shops in existing HDB estates. To address this, the government plans to inject new supply “when necessary”, according to Senior Minister of State for National Development Sun Xueling. This may include acquiring privately held HDB shops if needed. In addition, there will be a higher proportion of HDB shops that will be rented out directly by HDB to meet the rising demand for retail services.As of August this year, there are about 15,500 HDB shops in Singapore. Approximately 55% or 8,500 of these shops have been sold to private owners by HDB, while the remaining 7,000 have been leased by HDB. It was also mentioned that the government stopped selling HDB shops back in 1998.Among the privately held shops, around 740 units were sold on 30-year leases. However, more than 80% of these units have less than 10 years remaining on their lease. Sun has stated that these units will be returned to HDB in phases, and will eventually be leased out by HDB in the future.READ ALSO: The GCB market is thriving, with sellers even raising prices for some propertiesHowever, there are also around 7,700 privately owned shops that were sold on 99-year leases. Most of these have more than 30 years left on their lease.Sun addressed several parliamentary questions on Sept 24 concerning the recent reports of increasing commercial rents for HDB shops. She acknowledged that the average per square feet (psf) rents for privately owned HDB shops have seen a sharp increase in recent times, especially for rental transactions with smaller-sized units, which tend to command higher psf rent.AdvertisementThe most notable case involved a tender for a 559.52 sq ft clinic at 954C Tampines Street 96, which was awarded to I-Health Medical Holdings in March for a record monthly rental bid of $52,188. The tender garnered 13 bids when it closed, with HDB noting that the rent price was “significantly” higher than the average rent of about $9,800 psf for similar-sized clinics leased by HDB in 2024. This is also the highest psf rental bid from the government for GP and dental clinics of this size so far.Sun shared that the average psf rent for HDB shops that were tendered out for medical facilities by HDB since 2020 were:$10.40 psf in 2020$10.00 psf in 2021$16.80 psf in 2022$$17.50 psf in 2023$22.70 psf in 2024$28.50 psf in 1H2025Moreover, for vacated HDB shop units located in existing HDB blocks, particularly those in older estates, the average psf rent has increased from $5.70 in 2020 to $11.40 in 1H2025. In contrast, the average psf rent for shops in new BTO estates in newer residential areas has increased from $12.30 in 2020 to $39.30 in 1H2025. Sun explained that the difference in rental increase between these two categories is because businesses typically find newer residential areas more attractive.“Until recently, we have been letting out most shop units for GP clinics purely based on price. To improve quality outcomes and to lower the bidding pressure, HDB and MOH have started piloting a price-quality method in tenders for GP clinics since May,” Sun says.This applies to the tender for a GP clinic in Bartley Beacon, an 880-unit BTO project on Mount Vernon Road in Bidadari. The project was launched during the November 2020 BTO sales exercise and was completed in June. The 1,076 sq ft GP clinic at Bartley Beacon was awarded to Bridgepoint Health, which submitted a monthly rent bid of $18,000 ($16.70 psf). The tender garnered 18 bids when it closed in May.The rent awarded was lower than the average rental bid of $35.50 psf for designated GP clinic tenders in new housing projects within the past three years, according to Sun.READ ALSO: [UPDATE] Investor consortium lists portfolio of 11 HDB shops and a retail unit at Peninsula Plaza for sale at $52.2 milIn addition, HDB also adopts a similar price-quality tender when evaluating bids for the shops it leases. Around 60% of the evaluation looks at the quality of the operator, which takes into account factors such as the company’s track record and community initiatives. This approach allows HDB to consider both price and quality factors instead of just awarding the unit to the highest bidder.Sun also mentioned that HDB engages professional third-party valuers to assess the rent for the next period after each existing tenancy is due for renewal. This process takes into consideration the recent rents of comparable properties in the vicinity, and the current market and local conditions. She also stated that over the years, around 90% of shops leased by HDB have not seen an increase in rent.However, for new generation neighbourhood centres, new eating houses and new supermarkets, the average rent has recorded a more moderate increase of 1.3% to 3.3% annually over the past three years.Sun also addressed concerns that sublet rents may see a more significant increase compared to what HDB charges its main tenants. She assured that the government will continue to monitor the situation and work towards improving means of keeping the public and those affected informed.

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