Impact of Escalating Hawker Stall Rentals on Food Affordability

Mr Yip Hon Weng asked the Minister for Sustainability and the Environment regarding the recent record-breaking hawker stall rent exceeding $10,000 per month (a) whether this signifies a trend of escalating hawker stall rentals; and (b) what impact will such a trend have on food affordability and accessibility for Singaporeans.

Sir, the National Environment Agency (NEA) lets out hawker stalls through monthly tender exercises, which are transparent and fair. Tenderers submit bids based on various business considerations, such as client profiles, the footfall of the location, expected patronage, and operating hours. NEA does not set any reserve rent or minimum bid price for these tenders. So, there is no pressure for people to bid higher if they feel that the characteristic of the place does not warrant such high price.

The recent tender for the cooked food stall at Marine Parade Central Hawker Centre attracted over 40 bids. The bids were quite competitive, with the top five bids above $8,000. Overall, this is a very popular centre as it is open for three meals throughout the day and has good footfall, especially given the recent opening of a new MRT station and additional developments that are near this centre.

While a few stalls at popular locations have attracted high bids, I must explain that such high tender prices are not the norm. The median successful tender price for cooked food stalls across hawker centres was about $1,800 in 2023. About one in five cooked food stalls were also awarded at tender prices at or below $500 in 2023.

Based on NEA's survey, on average, rental forms less than 10% of operating costs for stallholders, compared to raw materials and manpower which accounted for 56% and 20% of their operating costs respectively in 2022. Nonetheless, NEA has various measures in place to moderate hawker stall rents. Besides not setting a reserve rent for tenders and disallowing subletting, tendered rents are also adjusted after the first tenancy term of three years towards an assessed market rent determined through independent professional valuation. As a result of the various measures, the median monthly rent of a non-subsidised cooked food stall across our hawker centres is about $1,250 and it has remained at this level since 2015. NEA will continue to monitor hawker stall rentals closely.

Thank you, Mr Speaker. I thank the Senior Minister of State for his reply. While the focus has been on food affordability for consumers, how does the Ministry assess the impact of increasing hawker stall rentals on small business owners and aspiring new entrants into the hawker trade? And what are the kind of support that are given to these groups amidst these rental increases?

Sir, I thank the Member for his question. As far as the stall rental pressures are concerned, NEA does provide hawkers with a conducive environment, including ensuring that rentals are kept reasonable and affordable at hawker centres. So, for example, NEA has put in place a series of measures to ensure that the rentals in our hawker centres are fair and not speculative. As I mentioned in my reply earlier, this includes disallowing subletting or assignment of hawker stores to prevent stallholders from engaging in rent-seeking behaviour. So, they basically just pass on the higher rent to the next guy who wants to sublet from them –and that is something that we disallow.

Also, NEA measures include adopting a transparent and fair monthly tender exercise, as I mentioned. Since March 2012, the reserve rent has therefore been removed in the tender of vacant stores to allow stall rentals to reflect fully the market conditions based on what people tendered.

While there are no minimum bid price restrictions, some may submit higher bids in order to secure the stalls at more popular locations. And let me just also mention that only about 4% of cooked food stores in hawker centres today are paying rent at above the assessed market rent. For the remaining over 6,000 stallholders, they are paying rent no higher than assessed market rent.

In fact, for some of our new hawker centres, under the Socially Conscious Enterprise Hawker Centre management model, NEA will take into consideration tender proposals holistically, including the total cost that hawkers will bear before we award the tender to the operator. And thereafter, the successful tenderer is required to maintain the same rates for charges collected from stallholders throughout the tenancy term. So, there is more cost certainty to many of the stall operators.

Since September 2019, operators of new hawker centres are also required to stagger their stall rentals for the first two years of the centre's operations at 80% and 90% respectively, before stallholders pay the full rental costs in the third year. So, this is to help stallholders manage their operating costs as they gradually establish a clientele in that hawker centre over the first two years of their operation.

For those who have, for example, bid a very high price, such as $10,000 or $8,000, in their first tenancy term, this price will hold. But following their first tenancy term, that price will be adjusted to the assessed market rent, which is about $1,800 to $1,500, thereabout. So, that will help to make the price more sustainable for this hawker in the longer term over the next tenancy terms. [Please refer to "Clarification by Senior Minister of State for Sustainability and the Environment", Official Report, 9 September 2024, Vol 95, Issue 140, Correction By Written Statement section.]