Hawker stall rents down after rules changed in March 2012

More than half the successful new bids are below original reserve rents

By Grace Chua, The Straits Times, 12 Sep 2012

SOME hawker stall rents have dropped to as low as $21 a month after reserve rents were removed by the Government in March, and stalls that were vacant for a year are now filled, the National Environment Agency (NEA) said yesterday.

While lower rents could help those who want to set up shop, they do not necessarily mean that food will be cheaper.

Previously, hawkers paid a minimum price set by the agency, which oversees wet markets and hawker centres. But that policy ended in March as one way to curb skyrocketing stall rental costs.

Besides removing reserve rents, the NEA now rents out hawker stalls that receive single bids over two tenders, rather than requiring competition from multiple bidders. It has also banned new stallholders from subletting their stalls.

"These results show that the removal of reserve rents has helped the market to establish the clearing price, and this has benefited several tenderers," the NEA said.

Since March, 158 market and cooked food stalls have been tendered out, and 86 of those successful bidders would not have been successful under the old system.

At Taman Jurong Market and Food Centre, one lucky bidder secured a monthly rental rate of $21 in the June tender exercise.

Other successful bids for Taman Jurong stalls in the same exercise ranged from $235 to $905 a month.

One stall there that had been vacant for six months was recently tendered out for $480 a month, below the original reserve rent of $600.

But the new measures have not curbed rents at popular food centres: The top bid for a stall at Maxwell Food Centre in Tanjong Pagar was $3,898 a month, compared with the top bid before February of $3,108 for a Newton Food Centre stall.

This year, much attention has been paid to how hawker centres operate.

In February, an expert panel appointed by the Environment and Water Resources Ministry came up with recommendations to control rent, have social enterprises run food centres, and encourage gracious behaviour such as returning trays.

Commenting on the drop in rent, panel member Teo Mee Hong, executive director of the Social Enterprise Association, said lower rent would not guarantee lower food prices.

"But to the extent that rent is not such a huge component of their costs, (stallholders) have more leeway to make their decisions," she said.

This could include increasing their profit margins, or attracting customers with lower prices instead.

The fact that more than half of the successful new bids are below the original reserve rent is "interesting", said Citigroup economist Kit Wei Zheng. "That tells you that in some sense, hawkers may have reached their tolerance level in terms of rental costs."

But he also pointed out that it does not necessarily mean cheaper food.

Although rent makes up a large chunk of stallholders' costs, they still face high raw material costs and labour costs.

At Taman Jurong yesterday, the market and food centre was closed for cleaning, but some stalls still had no signboards. Other stallholders said they were vacant.

A dessert-stall holder, who wanted to be known only as Madam Tan, 58, said lower rents could go only so far to help hawkers, especially those whose stalls were tucked away on the top floor or at the back of the three-storey food centre and saw less customer traffic.

"Even if it's cheap, if there's no business, there's no point," she said in Mandarin.




Related
More Than Half Of Stalls Awarded Since March 2012 Enjoy Lower Rents Under Policy Change -10 Sep 2012
No more subletting for stallholders from 1 April 2012