Higher occupancy & lower rental for stalls under new tender system

SINGAPORE: More stalls which were lying idle for months have been taken up while rental rates have been falling — due to a new tender system, where a reserve rent is no longer set when tendering vacant stalls.

The National Environment Agency (NEA) said on Tuesday that 86 stalls, or 54 per cent, of the total stalls awarded to successful bidders since March 2012 would not have been awarded under the previous tender system, where bids had to match or exceed the reserve rents set for the stalls.

The new tender system was introduced in March, following the hawker centre policy review by the Ministry of the Environment and Water Resources.

The NEA said with the change, stalls that were previously vacant for at least six months have now been occupied.

With the reserve rent removed, the lower range of successful tender bids fell from $600 to $21 for cooked food stalls, and from $146 to $26 for market stalls over the last five tender exercises.

For example, a cooked food stall at Taman Jurong Market and Food Centre was awarded at $21 per month in the June 2012 tender exercise.

There was also an increase in the number of stalls awarded at bids below the previous reserve rent from March to June 2012.

For example, 12.5 per cent of market stalls that were awarded for the March tender exercise were below the reserve rent.

The percentage rose to 50 per cent for April, then climbed further to 73 per cent for the subsequent months.

A similar trend was also observed for cooked food stalls.

The NEA said these showed that the removal of reserve rent has helped the market to establish the clearing price and benefitted several tenderers.

It also allows vacant stalls to be allocated to the highest bidder, as long as there are competitive bids.

This allows for higher occupancy of hawker stalls, as the market is no longer restricted by the floor price.

Following the removal of reserve rent, 31 cooked food stalls and 39 market stalls which were vacant between three and 12 months were awarded in the last few tender exercises.

Among these, 11 or 35 per cent, cooked food stalls and 17 or 44 per cent of market stalls were awarded at below the reserve rent.

For example, stall #03—126 at Taman Jurong Market and Food Centre was vacant for six months, but was recently awarded at $480.

Its original reserve rent would have been $600.

The NEA said despite the encouraging signs of falling rentals, stalls in popular centres continue to attract high bids.

An example is Maxwell Food Centre, where one of the successful tender bids for a cooked food stall was the highest over the five tender exercises at $3,898.

— CNA/xq