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Perception gap persists on retail rentals: MP

SINGAPORE — While official data point to retail rental increases that are broadly in line with inflation, the on-the-ground perception is that some landlords have raised rents by much more than that, with some asking for double when leases are up for renewal.

SINGAPORE — While official data point to retail rental increases that are broadly in line with inflation, the on-the-ground perception is that some landlords have raised rents by much more than that, with some asking for double when leases are up for renewal.

Member of Parliament Denise Phua (Moulmein-Kallang) made this point yesterday when she asked Minister of State for Trade and Industry Teo Ser Luck how the numbers are compiled after he said in Parliament that, based on data from January 2012 to May 2013, the median increase in rentals upon renewal was in line with inflation.

“No matter what the Government says, that perception seems to be persistent,” said Ms Phua, who said that “there seems to be quite a number of data points that suggest that retailers, when they negotiate for tenancies which expire” were asked for rental increases of as much as 100 per cent.

Mr Teo replied: “Of course there are different experiences and practices between landlords and tenants because of the contractual arrangements. Also at different locations they will experience different commercial practices.”

About one in 10 tenants experienced cumulative increases in rental of more than 50 per cent, and these tended to be those renewing their leases after more than four years, or who had units in more attractive locations, he said.

Mr Teo added that the Government is looking into publishing more comprehensive rental data for retail and industrial space by this year.

In compiling data on rentals, the intent as much as possible is to look for “the sources which make sense, maybe geographical points, how high or how low the rental index is in that area”. But this will not include data so specific that it relates to individual buildings, Mr Teo said.

He was initially responding to a parliamentary question by MP Lee Bee Wah (Nee Soon) on whether the ministry is able to take steps to moderate rentals for SMEs to help them cope with rising operating costs.

To do this, he said, the government will be releasing an average of 500,000 sq m of multiple-user factory space annually for the next three years — almost double the annual space demanded for the past three years.

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