Are high bids for hawker stalls the new trend?

The $5,001 bid for a Tekka Market and Food Centre stall was the highest successful bid received at the food centre, and almost four times more than the average rent for a stall there.
The $5,001 bid for a Tekka Market and Food Centre stall was the highest successful bid received at the food centre, and almost four times more than the average rent for a stall there.ST PHOTO: GAVIN FOO

NEA data doesn't show big rise in rentals, but experts say system could lead to overbidding

In February this year, Mr Hussain succeeded in his bid for a hawker stall at Tekka Market and Food Centre with a monthly rent of $5,001.

It was the highest successful bid received at the food centre, more than double last year's highest bid of $2,333. It was also $1,001 more than the second-highest bid received for the same stall.

Data collated by The Sunday Times from the National Environment Agency's (NEA) list of successful tender bids last year showed that the average rent for a stall at Tekka Market and Food Centre was $1,335. Mr Hussain's bid was almost four times more than that.

"No choice lah. We have to (go) a little higher to get it," said the briyani seller, who declined to give his full name.

He has four relatives selling food at the same food centre. He was willing to place a much higher bid to secure the stall that is next to his brother's and also near the entrance of the food centre.

Last month, a woman successfully bid $10,028 for a stall to sell drinks at Chomp Chomp Food Centre. But she terminated the lease on the day she signed it, said NEA, which called the bid an "outlier".

Although NEA data did not show a rise in rentals across hawker centres, experts said the system could pose a risk of overbidding at some hawker centres with high footfall.

Out of the 33 successful tenderers in July's tender exercise, three winning bids were double the price of the second-highest bid. About 12 winning bids were at least 50 per cent higher than the second-highest bid.

 
 
 
 

ZACD Group executive director Nicholas Mak warned that overbidding could run counter to the Government's objective of keeping the cost of living low. He said: "The most recent few transacted rentals become the new benchmark for the next batch of stalls out for tender."

Sometimes hawkers get misleading information. "They hear rumours that a particular stall was bid for $4,000, so they bid $5,000," said Mr Mak. "They don't do a financial feasibility study and they may have an overly optimistic outlook."

A high turnover rate can be seen in some hawker centres, which could be a sign that hawkers struggle to sustain their businesses.

Data showed that Amoy Street Food Centre, Maxwell Food Centre, Chinatown Complex Food Centre, Golden Mile Food Centre and Taman Jurong Market and Food Centre had the highest number of successful tenders between 2013 and this year.

The Sunday Times found about 10 vacant stalls during a visit to a hawker centre in Circuit Road last month. NEA's website showed three of the stalls were awarded in July's tender exercise.

Mr Cheng Teck Hua, 60, who has been selling satay at the hawker centre for four years, said: "Many of the stalls here have been vacant since last year. Some of the new businesses operated for only one to two months and decided to terminate their leases."

Ms Bui Thi Yen, 30, who sells Vietnamese food, might give up her stall if she still suffers losses this month. "I suffered a loss of almost $2,000 last month. It's mainly the cost of food ingredients, utilities and rent ."

Ms Bui successfully bid $818 for her stall last November, but started her business only on Aug 5.

Every month, NEA, which manages 114 hawker centres, lets out vacant stalls under the Hawker Stall Tender Scheme in order to ensure transparency in the allocation of stalls. In 2012, it removed the reserve rent for stalls to allow rentals to fully reflect market conditions and award stalls to the highest bidders.

It said the average successful bid for its cooked food stalls in the last three years was $1,514. In 2014, a stall was tendered for just $1.

The Sunday Times found that bids for halal cooked food and Indian cuisine stalls tend to be much lower than other cooked food stalls.

One cooked food stall at East Coast Lagoon Food Village was tendered for over $2,700 in 2014. The latest tender for the same unit, which has been reclassified as an Indian cuisine stall, saw the bid drop to $38 in March this year.

But there are exceptions, like Mr Hussain's stall.

Mr Hussain, who charges $5 for a plate of briyani, said he has to make $500 sales a day to cover his costs. "My family has been selling food here for many years... Indian business can survive in Tekka."

A version of this article appeared in the print edition of The Sunday Times on September 09, 2018, with the headline 'Are high bids for hawker stalls the new trend?'. Print Edition | Subscribe