Reduce rental costs to help local company

[chialc88]

Reduce rental costs to help local company - BT editorial

To ensure Singapore's economy is as strong as possible when liquidity outflows accelerate, the government'a attention should be on shoring up the local SMEs base.

It should examine ways to cool commercial rental as well.

**** the money is now in commercial ???

Love Compassion




A Life not Reflected is a Life not Worth Living.

[opmi]

Ya. PAP govt sabo the SME sector when they REIT the indu properties into Ascendas and Mapletree.
Now indu rentals are beyond Govt control. REITS can only pursue profits because of public shareholders. That's means higher and higher rentals. Killing the SMEs and the potential jobs creation engine. Blame the 'Singapore inc' mentality.

[dreamybear]

I feel the rental in SG is really an impediment on starting a business.

If I remember correctly, I encountered even more onerous terms : if the outstanding lease contract is forfeited, I hv to find another tenant or pay the full sum of the remaining lease or get sued. In a way, the landlord always gets the better end of the deal. Think selling drinks in coffeeshop has the highest "margin" with least effort(no need to prepare and cook dishes). Perhaps, that is one key reason why passive income from owning an investment property is so popular with Singaporeans.

Rental and labour are 2 main cost components in a business. However, property is not a productive asset like labour - the current environment of high property/land prices, constant asset enhancement for ever higher yields is benefiting the priviledged few rather increasing the pay of rank and file Singaporeans. Looking into the future, retrenchment / restructuring is going to be the new normal. PMETs are already expending effort and sacrificing personal time for constant upgrading vs the rich who buy shophouses for rental and earn passive income. As a Singaporean, I wld hope to see stricter immigration laws like in other 1st world countries - for a start, foreigner/PR to Singaporean worker ratio wld be good. This could lead to companies raising the wages to attract workers, while at the same time, lower the asking rents of landlords, instead of the current situation - high rent, low pay.

Although some may argue land in Singapore is limited, I am not sure whether it is efficiently used when we have empty condo units, empty shop spaces, shops selling the same things (e.g. multiple telco reseller shops in hdb heartlands). I think for the next stage of our country's growth, "free market" land/ property policies may not be the best way fwd.

Furthermore, in view of our consistent low birth rates, income inequality issues and the call for entrepreneurship / innovation / re-inventing ourselves, I hope there are some out-of-the-box considerations for our future economic policies.

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"....But with two years left on the lease contract, walking away is no simple proposition. "If you give up the unit, management will ask you to get another tenant and if cannot, you forfeit your deposit. On top of that, you might be sued for the remaining contract and you still need to reinstate the shop," he said...."
https://www.straitstimes.com/singapore/k...-challenge

[Ben]

If I remember correctly, I encountered even more onerous terms : if the outstanding lease contract is forfeited, I hv to find another tenant or pay the full sum of the remaining lease or get sued. In a way, the landlord always gets the better end of the deal. Think selling drinks in coffeeshop has the highest "margin" with least effort(no need to prepare and cook dishes). Perhaps, that is one key reason why passive income from owning a property is so popular with Singaporeans.

Which is why it is important to sign the lease under a Pte Ltd company and not individual name. When the business is not able to continue as a going concern, landlord, or any creditors can sue the company to recover as much as they could, but they cannot sue the owner directly if the contract is signed under company name.

[dreamybear]

If I remember correctly, I encountered even more onerous terms : if the outstanding lease contract is forfeited, I hv to find another tenant or pay the full sum of the remaining lease or get sued. In a way, the landlord always gets the better end of the deal. Think selling drinks in coffeeshop has the highest "margin" with least effort(no need to prepare and cook dishes). Perhaps, that is one key reason why passive income from owning a property is so popular with Singaporeans.

Which is why it is important to sign the lease under a Pte Ltd company and not individual name. When the business is not able to continue as a going concern, landlord, or any creditors can sue the company to recover as much as they could, but they cannot sue the owner directly if the contract is signed under company name.

Thanks Ben for your advice.   Unfortunately, all these are learnt thru' experience - unless we have mentors / parents to guide us, it is very difficult for a new business owner as there are just so many things to pick up and consider even from the start.

[Big Toe]

My 2 cents is that debating on rental is pointless. It is something beyond our control and there is little the government can do. In fact the rental on HDB/JTC offices/industrial properties are extremely low now. Some wet market stalls cost next to nothing. Retail space in some low traffic areas are extremely low as well.

What is more important is the value that the business is able to generate within that space. If one is just looking to resell what is available on Taobao, what value is there? Will it be able to generate enough to cover a few staff and rental? In the end, it is what it is, the ones that are able to have higher value add will take more expensive retail spaces. The start ups / ones that are able to generate less will reside on cheaper spaces. Those that are not able to afford even the cheapest spaces will cease to exist as a business.

Imagine opposite scenario happening. Free or very low cost rental + Wage subsidies for very long periods. What happens then? Extremely unproductive companies or Zombie Companies would continue their businesses. Occupying land that otherwise could support healthy and profitable businesses.