Rents for heartland shops are soaring, with privately owned HDB shops hitting record highs. For small businesses, this means rising costs and tougher choices, while HDB-managed units continue to provide some level of stability.
Table of contents
- Rising rental rates for privately held HDB shops
- Context and supply of HDB shop units
- Differences between private landlords vs. HDB
- What’s behind the sharp rental increases?
- How is this impacting small businesses?
- Are there any signs of the HDB market cooling in the near future?
Rising rental rates for privately held HDB shops
Over the past year, HDB shop rentals under private landlords have more than doubled. Median rates moved up from S$3.51 psf in Q2 2024 to S$7.34 psf in Q2 2025, marking the highest level on record since data tracking began in 1999. This sharp increase has left many business owners struggling to cope with rising costs.
By contrast, HDB-owned shop units have remained far more stable. Data shows that rents for nine out of ten of these shops have hardly changed in the last five years, providing some relief for businesses fortunate enough to lease directly from the board.
Context and supply of HDB shop units
To understand this better, you need to look at the breakdown of supply. Around 8,500 HDB shop units are privately owned, while about 7,000 are directly leased out by HDB. The government stopped selling shop units to private buyers back in 1998, so all newer shop spaces have remained under HDB’s management.
According to The Straits Times, HDB has explained that this approach allows it to better manage the trade mix and ensure shops meet the needs of residents in different towns. Privately owned HDB shops are also subject to lease terms. While it was previously stated that most of these units were sold on 30-year leases, HDB has since clarified that only about 5% of shops carry 30-year leases, while a larger share of 51% were sold with 99-year leases. Many of the 30-year leasehold shops are due to expire around 2028, which could further reduce the pool of privately held units in the years ahead.
Differences between private landlords vs. HDB
When you compare the two options, the differences are quite clear.
If you rent from private landlords, you will usually face more volatile rental swings. Prices can jump quickly, especially in older estates or in central locations where footfall is high. Yet, these shops give you more freedom in terms of business type, since private owners have fewer restrictions on allowable trades.
On the other hand, HDB-owned shop units are known for their stability. Rental increases tend to be moderate, often rising just 5–10% over a decade. HDB also reports its numbers in averages, while URA Realis reports median figures for private shops. The main drawback, however, is availability. Demand is strong, and many public tenders attract dozens of bidders. As a result, some businesses are priced out by high offers even if they prefer the steadiness of HDB leasing.
What’s behind the sharp rental increases?
So why are privately owned HDB shops rent climbing so quickly? Analysts have pointed to stronger post-pandemic consumer demand. With foot traffic bouncing back in older estates, many businesses are willing to pay a premium for such spots.
Privately held shops are also more flexible when it comes to permitted trades, unlike HDB-owned units where each tenancy agreement locks the unit into specific uses. This added freedom has drawn more interest from businesses looking to tap into new opportunities.
How is this impacting small businesses?
For many small retailers, these rental hikes are becoming hard to manage. Some have had no choice but to sublet part of their shop space just to make rent more affordable. Others have downsized to smaller shops, giving up space in exchange for lower rental obligations.
In places like Toa Payoh, business owners have reported at least five shop closures or downsizing moves in just the past year. Some stores that once operated comfortably have now relocated, while others have shut their doors for good because rents were no longer sustainable.
Even for those still holding on, margins are thin. When rents rise by 20% to 30% in a single renewal, many business owners are forced to rethink how much space they truly need.
Are there any signs of the HDB market cooling in the near future?
Although rental growth has been intense, there are early signs that the market may be easing. Analysts have observed that the pace of increases has started to slow in 2025. Business sentiment is softer, largely because costs for manpower, utilities, and supplies have gone up.
This has shifted dynamics in the market. While 2024 was very much a landlord’s market, the situation in 2025 is moving towards a tenant’s market. With fewer new businesses rushing to take up space, landlords are becoming more open to negotiations. Some are willing to accept offers below their initial asking prices, something that was far less common a year ago.
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