Prices of Housing Board shops have shot up over the past three years due to limited supply and investor demand, say agents and analysts.
Rentals have followed suit though the increases have not been as dramatic as resale values.
While rents are not as high as those at suburban malls yet, the increases have squeezed margins for tenants, which are often "mom-and-pop" shops or small and medium-sized enterprises.
Mr George Wong, 32, who runs bubble tea shop Moly Cafe in an HDB retail unit in Toa Payoh, pays his private landlord about $3,800 a month for around 380 sq ft of space - equivalent to half the first storey of a standard HDB retail unit.
He said he has been renting the unit since 2010 and reached an agreement with the landlord to keep the rent from skyrocketing. He said his landlord turned down a $2 million offer recently to buy the shop.
Mr Henry Ong, a real estate agent who has been handling commercial property transactions since 2007, told The Straits Times that rents have been rising in tandem with increasing resale values.
"Most HDB shops islandwide could be rented at $4,000 to $5,000 per month five years ago. Now for that amount you'd get only half a shop."
That translates to as much as around $14 per sq ft a month for centrally located retail shops.
Coffee shops cost slightly more.
Chris International director Chris Koh estimates coffee shop rents are 20 per cent to 30 per cent higher compared with that of shops in the same area because coffee shops draw more customers.
A standard two-storey HDB shophouse is 1,400 sq ft to 1,500 sq ft, so the shop on the first storey is usually 700 sq ft to 750 sq ft.
Colliers International deputy managing director Grace Ng said asking prices for resale HDB shophouses have generally risen over the past few years by 30 per cent to 50 per cent.
But while investor demand is increasing, there is a limited supply of HDB shops that can be resold, so prices are rising.
Out of the 14,450 HDB shops islandwide as at March, 8,500 were sold by the HDB to private landlords under a Sale of Tenanted Shops programme that began in 1992 and was discontinued in 1998, the HDB told The Straits Times.
Only these 8,500 shops can be resold on the private market. They tend to be found in older estates such as Toa Payoh, Yishun and Hougang.
The other 5,950 are owned and leased out by the HDB. This number includes all the shops in newer towns such as Punggol, Sengkang and Sembawang. They are let by open tender on a fixed term tenancy of three years at market rates, the HDB said.
The tenant mix differs between HDB-leased shops and privately owned ones, because private landlords subdivide their units and lease those separately to boost rental yield.
As a result, tenants of privately owned HDB shops tend to be those that require less space, such as bakeries and convenience stores.
HDB-leased shop tenants tend to be larger ones such as banks and restaurants, Ms Ng said.
Unlike with other commercial properties, there is no publicly available information on resale transactions of HDB shops.
Ms Ng reckons that shops in prized locations such as Clementi Town Centre can sell for $3.5 million to more than $10 million, depending on the size and position.
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