NTUC FairPrice won the bid, with a rental rate of $13 per sq ft.
Sheng Siong has once again failed to secure a site during the latest Housing and Development Board (HDB) commercial sites’ provisional bidding.
According to RHB, NTUC FairPrice won the bid, with a rental rate of $13 per sq ft for the 5,812 sq ft of space at Bishan.
In the previous biddings, Sheng Siong and other larger players were outplayed by smaller players. With the recent bidding, no small players placed any bids. RHB said the competition for rental space posed by small supermarket and minimart chain operators is unsustainable.
"We believe that the latest provisional bidding results could mean that these players may have begun to feel the pinch," RHB said.
Further, RHB argued that sky-high rentals cause small players to fall out.
"Based on our understanding, while Sheng Siong has been able to achieve an average revenue of $1,826 per sq ft, the gestation of a new supermarket is typically 2-3 years. Therefore, during the first year of operation, the average revenue of a new supermarket would only be 50% of an average mature store. Small players with lower revenue, poorer margins and insufficient balance strength would not be able to ride out these challenges," it explained.
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