Urban Myth Exposed: Why retail rents in Singapore aren't as high as you think

MTI reveals real figures in a juicy report.

Rising retail rents have been the main culprit behind the shutdown of many shops in Singapore--at least from the perspective of many irate retailers.

But in its latest report, the Ministry of Trade and Industry revealed that the cumulative increase in rent faced by retailers upon lease renewal is highly skewed. In 2013, while one in ten retailers saw a cumulative increase in rent of more than 45 per cent, a quarter of the retailers saw far smaller increases of 5.5 per cent or less, and another quarter saw no change or a drop in their rent.

Here's more from MTI:

Focusing on rental renewals in the last two years, we find that 76 per cent of the renewals were made within three years of the signing of the previous rental contract. In particular, 36 per cent of the renewals were made around a year after the earlier contract was signed, and 22 per cent around two years after the earlier contract was signed.

The median cumulative rental increase faced by these two groups of retailers was 3.3 per cent and 5.8 per cent respectively. On a per annum basis, the effective increase in rent, at 3.3 per cent and 2.9 per cent respectively, is similar to the rate of inflation of 3.5 per cent per annum from 2011 to 2013.

While there were instances of higher cumulative rental increases upon lease renewals (>20 per cent), these cases only accounted for 20 per cent of all lease renewals in 2012 and 2013, and were generally for leases that were being renewed after more than five years. 

For instance, the median cumulative increase in rent for units renewed around six years after the previous contract date was 23 per cent. This works out to be an increase of around 3.6 per cent on an annual basis, in line with the rate of inflation from 2007 to 2013.