HDB's Reply

HDB ensures a good supply with affordable food options
Date: 30 Jun 2022

We thank Mr Keith Wong (“Ensure prices remain affordable”, 20 June), Mr Jonathan Wong (“Not in Govt’s business to intervene in commercial decisions”, 22 June), Mr Peh Chwee Hoe (“Residents in some places at the mercy of high prices”, 24 June) and Mr Lee Yat Cheong (“Sad if communal experience is lost due to higher prices”, 24 June) for their feedback.

To provide residents with access to affordable food options, HDB ensures that there is a good supply of eating houses in every HDB estate and town to maintain healthy price competition. There are presently 772 HDB-built eating houses, of which 372 are rented out by HDB and 400 are privately-owned. 34 eating houses were completed in the last 4 years, and another 30 eating houses will be completed in the next 4 years. There are over a hundred hawker centres in Singapore, and the Government is building more - 4 new centres will begin operations this year, with another 7 being planned or under construction.

Privately-owned eating houses are transacted on a willing-buyer-willing-seller basis. To deter speculation, HDB has discontinued the sale of eating houses since 1998. All new eating houses built are now rented out by HDB, typically on a tenancy term of 3 years, with the option for renewal. In 2018, HDB introduced the Price-Quality Method, where prospective eating house operators renting from HDB are assessed not just on their price bids, but also on the quality of their offerings and track records. Quality score counts for 50% of the evaluation, and operators with affordable food options will be awarded higher points under this scoring system. The median rent for eating houses tenanted out by HDB has remained stable for the past five years.

While the stall rental rate is a private contractual agreement between the eating house operator and individual stallholders, it is in the operator’s business interest to keep the rents of their stalls reasonable to retain their stallholders. If the rents are too high, stallholders could move to other nearby eating establishments, resulting in vacant stalls and holding costs for the operator. Similarly, stallholders will usually also benchmark their cooked food prices to other eating establishments in the vicinity to attract diners and remain competitive.

HDB will continue to monitor the eating house operators’ performance and ensure that there are adequate eating houses available, so that residents can continue to enjoy affordable food options.


He Kangwei (Mr)
Director (Policy & Planning)
Housing & Development Board
 

Letters to The Straits Times

Sad if communal experience is lost due to higher prices
Date: 24 Jun 2022

From: Lee Yat Cheong

Forum writer Jonathan Wong said that if people find prices at coffee shops unaffordable, "they can cook their own meals at home" (Not Govt's business to intervene in commercial decisions, June 22).

Gathering in coffee shops has been a tradition in Singapore for families, students, workers and especially seniors.

And it would be sad to see the day when many could no longer afford to do so due to the higher food prices as a result of coffee shops being sold for large sums, and have to eat at home.

Residents in some places at the mercy of high prices
Date: 24 Jun 2022

From: Peh Chwee Hoe

Mr Jonathan Wong's contention that we should let sky-high transaction prices of coffee shops be, as these are purely commercial decisions that would be tempered by supply and demand, is an oversimplification of the real issues (Not Govt's business to intervene in commercial decisions, June 22).

HDB incorporated neighbourhood coffee shops into estates to serve the social purpose of giving nearby residents easy access to affordable meals.

In places where there are many households and no alternative coffee shops nearby, the residents are at the mercy of the high prices charged by the coffee shop stalls to recoup the high prices paid in rent.

And when one coffee shop starts charging high prices, it might embolden nearby coffee shops to raise their prices as well. The losers in the end are the residents.

In the days when there was less wealth inequality, a hawker would be very wary of raising his prices for fear of losing customers because everyone was very price-sensitive.

With rising wealth disparity, there is now a sufficient pool of willing payers for raised prices, leaving the lower-income groups out in the cold. And we're talking food here, not luxuries.

We are living in a country, not a pure commercial entity, and every person must feel that he has a place in it. In areas where the lower-income feel powerless to fight rich asset holders, the authorities should step in to look after their interests.

Not Govt's business to intervene in commercial decisions
Date: 22 Jun 2022

From: Jonathan Wong

Prices are effective only when they reflect actual economic conditions, and the authorities should not attempt to intervene (Ensure coffee shop prices remain affordable, June 20).

Prices should rise and fall as consumer preferences change or when supplies become more or less scarce.

There are many choices in Singapore when it comes to coffee shops and foodcourts. Operators who charge high rent, which tenants then pass on to diners in the form of higher prices, risk chasing customers away because there is keen competition and customers can always choose to go to other locations.

The authorities should step in to control prices only if there are public complaints of businesses taking advantage of a situation to engage in profiteering, such as when masks were selling at sky-high prices at the beginning of the Covid-19 pandemic.

State intervention in commercial business decisions would force retailers to close if the controlled prices are unable to cover their overheads.

The purchase price of a commercial property like a coffee shop is affected by factors such as supply and demand, location, footfall, size and the length of the remaining lease.

When a buyer is prepared to pay a high price for a coffee shop, surely he must have carefully studied its attributes.

The food business is an open market. If customers find the prices unaffordable, they can cook their own meals at home.

Ensure prices remain affordable
Date: 20 Jun 2022

From: Keith Wong

I read with consternation and astonishment that a coffee shop in Tampines was sold at a price that is on a par with retail units in Orchard Road malls (Tampines coffee shop sold for record $41.68m; tenants say rent doubled, June 16).

Another in Yishun also changed hands at around the same price (Coffee shop in Yishun sold for $40m in second such sale this year, June 19).

Free-market pricing has gone too far now, and will certainly affect the affordability of food in the HDB heartland.

Imagine going to a coffee shop – without the ambience of a mall setting and air-conditioning – and having to pay $10 for a simple plate of char kway teow or chicken rice.

Would exorbitant prices drive customers away? Would it affect the livelihoods of the workers? Something should be done before this phenomenon spreads to other heartland coffee shops.

Perhaps the authorities could set a range of prices for food sold in heartland food centres and coffee shops to ensure it remains affordable to the average person.