Singapore is known as a food paradise and shopping haven. But behind the shiny façades of cafés, boutiques, and bakeries lies a quieter crisis: many small businesses are closing — and rental increase is to blame.
Since 2024, commercial rentals for both shophouses and mall spaces have jumped significantly. The changes may not seem obvious at first, but they’re already affecting what you see (and pay) in your neighbourhoods and local malls. And as it turns out, rising rent isn’t just a business issue — it’s a consumer story, too.
Why Are Rents Rising?
Think of the rental market as a pressure cooker — and in recent years, multiple forces have been turning up the heat.
1. Higher Interest Rates, inflation
When interest rates go up, property owners with loans — including big landlords and REITs — have to pay more each month to the bank. Imagine you own a flat and your mortgage repayments suddenly go up by 30%. You’d try to offset that cost — maybe by renting out a room at a higher price.
That’s what commercial landlords are doing. This is especially intense for REITs, which finance shopping malls and commercial buildings. As interest rates rose globally from 2022–2024, those costs piled up. In turn, they passed the pressure downstream — to retailers and F&B tenants.
According to Knight Frank Research, as at the first quarter of 2025, prime retail rents in prime central region malls have increased by 11.8% in the post-pandemic period, while prime suburban retail rents rose by 5.8%.
2. Investor Demand for Limited Supply
Singapore’s shophouses and prime mall spaces are like limited-edition sneakers — rare, in high demand, and rapidly appreciating in value. The average unit price increased by 186.2% in just 6 months!
With wealthy investors snapping up these properties as long-term assets, purchase prices have soared. And as sale prices rise, so do rental expectations.
3. REITs and Positive Rental Reversions
Retail rents have been moving up despite a challenging operating environment marked by high labour, material, and occupational costs. REITs (Real Estate Investment Trusts) often follow a model called positive rental reversion, where rents are raised with every new lease — regardless of whether the tenant’s business is doing well. In simple terms, even if the tenant is struggling or the economy is weak, the landlord expects to raise rents based on historical or projected property values—not necessarily the tenant’s performance.
It’s like a gym raising your membership fee every year, even if the showers are broken and the classes are half-empty, just because the building next door increased its rates.
4. Robust demand from foreign brands
Big international brands continue to dominate the prime city spaces. French sports label Salomon has set up shop at both Ngee Ann City and Orchard Central, while Finnish lifestyle brand Marimekko has a second outlet — also in Ngee Ann City. They join a growing list of fashion and sports giants like Burberry, Tom Ford, Li-Ning, and Decathlon, all gravitating toward high-traffic, high-rent districts where only the biggest players can afford to play.
The (Pricey) Gentrification
You might not notice it straight away, but next time you walk through Siglap, Joo Chiat or Tiong Bahru, pay attention. The quirky independent café, the old-school bakery, or the art shop you loved might be gone — replaced by a chain, or an empty unit.
The shophouse market has experienced notable rent increases in certain districts. In Q2 2024, areas like District 8 (Little India) and District 14 (Geylang, Eunos) saw quarter-on-quarter rental growth of 12.8% and 12.4%, respectively. Shophouses in District 8 remained the most popular, thanks to the ongoing gentrification of Little India into an area featuring hipster and trending retail and F&B offerings.
In Siglap, median shophouse rents hit S$7,350 per month in 2024, pricing out long-standing businesses like Flor Patisserie. The decade-old bakery, a staple of the neighbourhood, couldn’t keep up when its rent spiked by 57%.
It’s not just shophouses that are affecting small businesses. Discussions on platforms like Reddit highlight that some tenants at Parkway Parade mall have left or reduced their space in response to rising rents. One user noted:
“Rental increase → shops with character cannot survive → nobody visits the malls because it becomes boring → shops with character cannot survive due to lack of foot traffic → malls become even more boring, and the cycle continues.”
Goodbye Variety, Hello Chain Stores
In malls, it’s the same story. Retail rents in Orchard Road rose 2.3% year-on-year in Q4 2024, while islandwide, prime retail rents increased by 3.6%.
These increases trickle down to you. Think of it this way: if a bakery pays S$3,000 more per month in rent, that’s 3,000 extra dollars they need to earn just to break even — which often means your croissant now costs S$6 instead of S$4.50.
For business owners, rising rents are choking out small businesses here, as they often don’t have pockets as deep as chain stores and global brands, and are less able to cope with sudden hikes.
An F&B Scene in Crisis
The food and beverage sector is being hit the hardest. More than 3,000 F&B outlets closed in 2024 — the highest in two decades. Many of these were independent operators in malls or shophouses. However, you’ve also read the news that despite the high number of closures, new F&B openings still outpace the closures, with 3,793 openings last year. The question here is this: how long will they last?
Some faced rent hikes of 30% to 35%, often with no guarantee of increased footfall. In some cases, landlords even doubled rent once an initial lease expired — a hike few small eateries could stomach. And it’s not just small eateries that are affected; many high end dining establishments – even those with Michelin stars – have shuttered.
Why This Should Matter to You
At first glance, it may seem like this affects only the business owners — but it affects you every day. When only chains can afford the rent, you lose:
- Variety in what you eat and buy.
- Affordable, neighbourhood options.
- Local flavour and cultural character.
It’s like turning on the radio and hearing the same song over and over again — because smaller, indie artists were priced off the airwaves.
Singapore risks becoming a place where every mall looks the same, every café serves the same menu, and every neighbourhood feels like a franchise. It could also be worse: with businesses unable to afford rent, many units will remain empty. Imagine going to an empty block of shophouses or a dead mall.
What Can Be Done?
Consumers can support small businesses where they can — but structural change is needed:
- Rethinking rental practices, including regulations that limit extreme rent increases or reward long-term tenancy.
- Encouraging more diverse ownership, so that the commercial landscape isn’t dominated by a few REITs.
- Urban planning with soul, where independent and culturally rooted businesses have a fair chance to thrive.
Because if rent is the single biggest threat to doing business in Singapore, then it’s also a threat to what we eat, what we experience, and what kind of city we call home.
