Option to Renegotiate Rental Contracts of HDB-owned Coffee Shops after Certain Number of Years

Assoc Prof Jamus Jerome Lim asked the Minister for National Development whether HDB will consider renegotiating rental contracts for HDB-owned coffee shops after a certain number of years following a successful tender bid, if it is shown that the patronage of the coffee shop is worse than originally anticipated.

The Housing and Development Board (HDB) currently owns and rents out about 390 coffee shops to operators, typically on three-year tenancies. This rent for the first tenancy is determined through open tender using the Price Quality Method. When an existing tenancy is due for renewal, the rent for the next tenancy period is assessed by professional valuers appointed by HDB, with reference to comparable coffee shop rents and prevailing market and local conditions. Generally, HDB does not renegotiate rents during the tenancy period. Operators who face serious difficulties can nonetheless approach HDB to discuss how best we can assist them.

This approach has kept rents and occupancy rates stable. Over the last five years, 97% of HDB rental coffee shop operators had their rents remain unchanged or slightly reduced. Only about 1% of operators return their coffee shops to HDB citing poor business or cost reasons.