Location of Commercial and Coffee Shop Space within HDB Estates and Efforts to Keep Food Prices Affordable Given Recent High Transacted Sale Prices of Coffee Shops

Mr Sharael Taha asked the Minister for National Development with the trend of increased transacted prices of coffee shops (a) what measures will be put in place to ensure that the high transaction cost for coffee shops is not passed on to consumers; and (b) how will the Government ensure that the neighbourhood coffee shops continue to provide affordable food to residents.

Mr Shawn Huang Wei Zhong asked the Minister for National Development (a) whether the Ministry tracks (i) the transacted prices of suburban coffee shops against the prices of HDB flats and the median income of individuals staying within the same area and (ii) the average rental price per square foot of stalls in suburban coffee shops against the median price of a cup of coffee sold in these coffee shops; (b) if so, what is the data for the past 20 years; and (c) what are the measures taken to ensure affordability of food and drinks sold in suburban coffee shops.

There are, presently, over 770 HDB coffee shops in Singapore. Some of these coffee shops are sold and are, hence, privately-owned, while the rest are rented out by HDB. The two coffee shops in Yishun and Tampines that were recently transacted at around $40 million each are amongst 400 coffee shops which had been sold by HDB in the 1990s. The intent had then been to encourage private sector ownership in running these coffee shops. Such privately-owned HDB coffee shops are now transacted on the open market on a willing-buyer-willing-seller basis. Some buyers may be bullish about units at certain locations and are, hence, willing to pay a higher resale price. The two coffee shops in Yishun and Tampines are also large, with many stalls. However, such transaction prices are a minority. Since 2010, 70% of resale transactions of sold coffee shops were at below $10 million. Resale volume is also fairly low, with an average of 15 transactions per year since 2010.

We are mindful of the need to ensure that residents have access to affordable cooked food options, and of the potential impact of such transactions and have, therefore, put in place various measures over the years. One key measure is to ensure a good supply of coffee shops in every HDB estate and town, so that there is healthy competition. These coffee shops can also be run by social enterprises, for example, NTUC Foodfare, to help keep food prices low.

The market for F&B is highly competitive, especially in our heartlands. For example, the two coffee shops in Tampines and Yishun are within neighbourhood centres that have five and seven coffee shops respectively within a 400-metre radius, and residents, hence, have a choice of affordable food options there.

Another example is the coffee shop at Bukit Batok St 11 that was sold at $31 million in 2015. Today, residents in that area have the choice of six other coffee shops within the vicinity. Despite the transacted price, it has been observed that food prices at the Bukit Batok St 11 coffee shop are marginally higher, by 10 cents to 20 cents, and a cup of coffee is the same price, as compared to other nearby coffee shops.

HDB plans the provision of coffee shops and other commercial amenities in new housing developments carefully, taking into account the number of dwelling units within the development as well as surrounding developments. The same approach is adopted for new housing developments in both mature and younger HDB towns. HDB also considers the residents' ease of access to amenities by surveying the availability of existing commercial facilities in the vicinity. Most residents can access commercial facilities, such as shops and coffee shops, within 400 metres' walking distance or a five- to 10-minute walk from their blocks.

HDB completed 34 new coffee shops in the last four years and continues to build new ones to serve new HDB developments. Another 30 coffee shops will be completed in the next four years. Aside from coffee shops, we also have over a hundred hawker centres in Singapore and the Government is building more. Four new centres will begin operations this year, with another seven being planned or under construction.

Ultimately, consumers must be given the choice to go elsewhere. This applies to stallholders as well. If the rents set by coffee shop owners are too high, stallholders could move to other eating establishments, resulting in vacant stalls and holding costs for the owners.

Since 1998, HDB no longer sells coffee shops and only rents them out. In 2018, HDB introduced Price-Quality tenders, with 50% of points assigned to the Quality of the operator, which includes aspects, such as the availability of budget meals, good track record and community initiatives. Operators who successfully tender for HDB coffee shops, typically, provide budget food options at every stall, with these priced at around $3. The rentals under Price-Quality tenders are also lower and more sustainable than under pure price-bidding tenders.

Coffee shops and food centres play an important social role in our HDB towns and estates, as they not only provide a convenient option for cooked food and drinks for residents, but also serve as key community hubs for families and friends to bond and connect over food and drinks. As such, HDB regularly monitors the resale market for HDB coffeeshops, as well as the prices of food sold in both sold and rental coffee shops and will not hesitate to review its policies to address affordability concerns where necessary.