The Housing and Development Board (HDB) will selectively acquire privately owned HDB shops if necessary and increase the overall supply of commercial units it leases out, said Senior Minister of State for National Development Sun Xueling in Parliament on Wednesday (Sep 24).

With this move, a higher proportion of shops will be directly rented out by HDB, where rents have remained stable in recent years. Ms Sun was responding to parliamentary questions about rising rents for HDB commercial units in heartland areas.

There are about 15,500 HDB shops across Singapore, of which roughly 8,500 are privately owned and 7,000 are leased by HDB. “We are aware that per square foot rents for privately owned HDB shops have seen a steep increase recently,” said Ms Sun, noting that rents for privately held units have more than doubled over the past year, while HDB shop rents have remained largely stable.

Ms Sun explained that the rise in rents coincided with more rental transactions involving smaller shop units, which generally command higher per-square-foot rents.

About 740 privately owned HDB shops were sold on 30-year leases, over 80 per cent of which have less than 10 years remaining. These units will progressively revert to HDB ownership and be tenanted out. Another 7,700 shops were sold on 99-year leases, most with more than 30 years left.

Since 1998, HDB has stopped selling shops to private owners and now rents them directly to businesses. Going forward, the agency will expand the supply of HDB rental shops, and “inject new retail supply to meet demand in existing estates when necessary”, said Ms Sun. This may include “selectively acquiring privately held HDB shops if needed”.

Mr Henry Kwek (PAP–Kebun Baru) asked if such interventions would target essential trades like cooked food stalls, given their impact on living costs. Ms Sun replied that while the government allows market forces to play out, it would “take a more critical look” at essential sectors such as food and medical services.

Mr Ang Wei Neng (PAP–West Coast–Jurong West) then questioned the conditions under which HDB would consider acquiring privately owned shops, noting that some owners lease their units at high rents, leading to an “undesirable business mix” in neighbourhoods, such as spas or moneylenders.

Ms Sun said acquiring privately owned shops transacted at high prices would not be “a good use of taxpayers’ money”. However, HDB could consider acquiring nearby shops around high-rent units if necessary to stabilise the business mix.

Stable Rents for Shops Leased Directly by HDB

For shops rented directly by HDB, Ms Sun said “various measures are in place” to keep rents stable. HDB shop tenancies typically last three years, and renewal rents are determined by professional valuers based on recent rents of similar premises and current market conditions.

Under this approach, rents for 90 per cent of HDB rental shops have not increased in the past five years. Over the last three years, average rents rose at a “moderate pace” of between 1.3 per cent and 3.3 per cent per year, she said.

Sublet of HDB Shops

Regarding the rental of sublet units, Ms Sun explained that HDB does not track such data, as these arrangements are private agreements between tenants and their subtenants.

“We recognise concerns that sublet rents may have risen more sharply than the rents HDB charges its main tenants,” she added.