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Hidden costs drive up rent, price smaller shops out of Orchard

Editor-at-large Han Fook Kwang hit the nail on the head with his balanced and succinct piece on the problems facing Singapore's most famous street (What's special about Orchard Road?; April 30).

However, he seems to have missed a point - hidden costs that translate indirectly to the myriad woes we face now in Orchard Road and other shopping areas in Singapore.

The problem is not so easily solved by bringing in more buskers and events and pedestrianising the street.

The truth is, Orchard Road is very boring because what is on offer as a shopping experience is no different from that of any of the large suburban malls.

There is not much point in hyping up Orchard Road with the proposals mentioned if no one is going to shop there.

While the suggestions for a milieu of smaller interesting shops are good, these shops can never afford the rent.

Why is this so?

There are two types of landlords here: real-estate investment trusts and private developers.

The former have an obligation to give certain expected returns to shareholders, and both have to bear the very high costs of development in Singapore.

Some of these include submission fees, fees to engineers, massive development charges to the Government, and the high cost of construction and labour.

It is not the landlord who is the beneficiary of all these fees and costs; it is the Government.

I am sure landlords would love to have different offerings that would distinguish their malls, but unfortunately, it is the usual suspects who can afford to pay the rents to give developers a chance to recover costs and have some form of return for the risk they take.

It is the duty of those who create these costs to ensure that the creative ideas and government revenue or needs are never allowed to run ahead of the revenue- generating capabilities of the areas' tenants.

Unless the root of the problem is addressed, all the money that is going to be spent on pedestrianising, bringing in shows and so on is not going to save Orchard Road.

Choo Meileen

Executive Director
Cathay Organisation

A version of this article appeared in the print edition of The Sunday Times on May 07, 2017, with the headline 'Hidden costs drive up rent, price smaller shops out of Orchard'. Print Edition | Subscribe