Rental prices for some HDB shop units in Singapore have more than doubled over the past year, raising concerns about affordability for small businesses and the impact on essential services.
Senior Minister of State for National Development Sun Xueling said in Parliament on Wednesday (September 24) that the government is exploring options to ease the pressure. These could include increasing the supply of shops directly rented out by HDB and, if needed, selectively acquiring privately owned ones.
HDB-let vs. privately owned shops
Today, there are about 15,500 HDB shop units across Singapore. Of these, around 7,000 are rented directly from HDB, while about 8,500 are privately owned after being sold in earlier decades. HDB stopped selling shops in 1998, choosing instead to lease them out.
The rental trends for the two groups of shops have been starkly different. According to the Senior Minister, 90% of HDB-let shops have not seen rent increases in the past five years. Even where rents have gone up, the pace has been modest, averaging between 1.3% and 3.3% annually over the last three years.
Privately owned shops, however, tell another story. Rents there have surged sharply, with reports of some doubling in just the past year. The increase has been driven partly by smaller-sized shop units coming up for rent, which command higher per-square-foot rates.
Impact of soaring HDB shop rents
The jump in rental price is not just a concern for tenants. Higher costs for small businesses, especially in essential trades like food and medical services, often trickle down to residents through higher prices. For example, average rents for HDB shop units leased out for GP clinics rose from S$10.40 per square foot in 2020 to S$28.50 in the first half of 2025.
This has prompted the government to rethink its approach. A new “Price-Quality Method” tender was piloted earlier this year for GP clinics, balancing cost with service quality. The first award, at Bartley Beacon in Mount Vernon, went for S$16.70 psf, less than half the awarded bid seen in similar tenders recently.
Selective acquisitions: A possible next step
One option the government is considering is to selectively acquire privately owned HDB shops, especially in areas where essential services are lacking. Sun stressed, however, that this would not become a blanket policy.
Privately owned shops were sold at market rates, and reacquiring them at today’s higher prices would not necessarily be a good use of taxpayers’ money. Instead, acquisitions may be considered in specific cases — for example, targeting clusters around a unit that is charging unusually high rents, or where the overall supply of essential services in a neighbourhood is deemed insufficient.
At present, about 740 shops are sold on 30-year leases, most of which are nearing expiry. These will revert to HDB over time, naturally boosting the pool of government-rented shops. The larger pool, around 7,700 shops sold on 99-year leases, will remain in private hands for decades to come.
The question of business mix
Beyond rents, there’s also the issue of what kinds of businesses can afford to operate in heartland shops. MP Ang Wei Neng raised the concern that private landlords often lease to the highest bidder, which can result in a proliferation of spas, massage parlours, or moneylending businesses that don’t necessarily meet residents’ needs.
A recent case in Tanjong Pagar Plaza highlighted this tension. Residents complained about the number of massage parlours and beauty salons, particularly with several preschools nearby. Police have conducted raids on vice activities, but as the shops are privately owned, HDB has limited influence over the trade mix.
MP Foo Cexiang suggested that HDB could consider buying back leases in such cases to better curate retail offerings, ensuring that neighbourhood centres remain relevant and family-friendly.
Balancing market forces and intervention
For now, the government appears cautious. Sun reiterated that market forces should generally be allowed to play out, with both landlords and tenants making their own business decisions. But she also signalled that the government will intervene more directly if critical needs — like affordable food options or medical services — are not adequately met.
In the meantime, HDB will continue to add new shops in upcoming housing projects and, where necessary, inject retail supply into existing estates. Over time, this shift toward a higher proportion of government-leased shops could help stabilise rents and keep essential services accessible to residents.
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