Sunday, October 16, 2011

High Rental- Even Starbucks Feeling the Heat

This is probably the only Starbucks in S'pore whose premises is booth-like as far as i know. Other outlets are in shopspaces. Why? High rental after the mall is bought by the govt owned media monopoly - S'pore Press Holdings. It also begs the question how come a media company is dabbling in property?

High rental is killing many business since it is a fixed cost. Property bubble in turn causes rental to rise which increases the cost of living. 2 questions that often pops into my mind is how much rental am i paying for when i'm buying this item? What value is that in paying high rental component? Often these 2 questions is enough to shut down the purchase decision in S'pore.

The building of more hawker centres after 26 years is a welcome move. Tourists don't come here for Mac, KFC, Pizza Hut etc or other overly 'spam' businesses. They are here to experience the local flavor & ambience & not in some overly commericalised food court. This is an aspect the govt ministers & the bureaucrats ignored in favor of big business in effort to get more revenue. Neglecting the long term in favor of short term boost in revenues.

Isn't it any wonder the govt built 2 casinos within a short period? - High rents in S'pore is making many businesses uncompetitive & in desperate effort to keep it going the floodgates are open to import in many foreign workers which our local infrastructure is straining to cope as well as other social issues. If 2 casinos can be completed within a few short years, 10 simple hawker centres can certainly be completed within 5 years. 10 years is just dragging their feet.


Good news only if...
I APPLAUD Minister for the Environment & Water Resources Vivian Balakrishnan for citing his preference for heartland hawker centres to be run as non-profit organisations ('Building more hawker centres welcomed'; Monday).

National Environment Agency (NEA), which manages all hawker centres, has worked admirably in ensuring that the centres are hygienic. Viability, its other responsibility, can be achieved only if NEA keeps rental rates affordable for entry-level entrepreneurs, who are often owners of fledgling family businesses or one-person operations.

I am an entry-level entrepreneur trying to make a living in Chinatown Complex.

After the building was refurbished in 2008, market rent for new stallholders who took over from retiring traders - be it subsidised or tendered lease - was raised reasonably. But in May this year, rent was raised again after NEA engaged professional valuers to appraise the value of the complex. Presumably the valuers considered its locality as well as the aggregate values of tendered stalls - which are unusually higher due to their speculative nature - and artificially affixed a new premium.

The result? Rent inflation ranging from an astonishing 71 per cent to a whopping 100 per cent.

This sudden, unexplained move is an unfortunate departure from the past practice of raising rent by small, graduated amounts - and a blow to struggling small traders.

On the one hand, the Government exhorts traders in hawker centres not to profiteer, but on the other, it surreptitiously pushes up operating costs.

Many large organisations fail due to over-trading. Small businesses perish because they are often undermined by high rents.

David Lam


Build hawker centres in 5 years, not 10
I HOPE the Government & the National Environment Agency (NEA) will build 10 new hawker centres in 5 years instead of 10 ("Building more hawker centres welcomed"; Monday).

The Government should also change the image & culture of hawker centres with bold new designs & quality features.

The NEA has the expertise to manage hawker centres under its purview on a not-for-profit basis and should drop its partnership with private players to cut unnecessary costs.

Low hawker food prices start with low rentals. Only with low rentals can hawkers charge $2 for a plate of chicken rice and $2.50 for a plate of wanton noodles. NEA plays an important role to mitigate cost of living issues by maintaining affordable prices at hawker stalls.

The agency must change its mindset of designing centres on the cheap. Instead, it should design the new millennium hawker centre to match Singapore's modernity. Why can't hawker stalls look sparkling clean and bright like the layout in foodcourts, with comfortable seating, marble-top tables, spacious aisles and neatly attired workers?

New complexes could be designed with natural lighting and ventilation, plus adequate ceiling fans. Use quality finishing to encourage patrons to keep the ambience clean and neat.

There should be adequate, well-designed restrooms, which must be kept dry at all times. Install powerful exhaust fans to filter out the odour of restrooms.

Regular hourly cleaning schedules must be strictly enforced by NEA inspectors. A dry toilet is a clean toilet.

Paul Chan

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