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earthfriendly
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Rental Increase

Postby earthfriendly » Mon, 06 Jan 2014 3:45 am

Wow, these high rental increases are driving out the businesses.


http://www.soshiok.com/content/rentals-businesses-out

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zzm9980
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Re: Rental Increase

Postby zzm9980 » Mon, 06 Jan 2014 9:43 am

earthfriendly wrote:Wow, these high rental increases are driving out the businesses.


http://www.soshiok.com/content/rentals-businesses-out


That's how the free-market works. As greedy landlords try to squeeze our more rental dollars, they'll also shoot themselves in the foot. Trendy little shops that make areas like Ann Siang Hill desirable (and thus high rent) will be pushed out to other areas, and the foot traffic will slow and stop. Later, the rents will come down.

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Postby ScoobyDoes » Mon, 06 Jan 2014 11:13 am

I'm just waiting for interest rates to start going back up, that will turn many things on their head.
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Re: Rental Increase

Postby PNGMK » Mon, 06 Jan 2014 2:49 pm

zzm9980 wrote:
earthfriendly wrote:Wow, these high rental increases are driving out the businesses.


http://www.soshiok.com/content/rentals-businesses-out


That's how the free-market works. As greedy landlords try to squeeze our more rental dollars, they'll also shoot themselves in the foot. Trendy little shops that make areas like Ann Siang Hill desirable (and thus high rent) will be pushed out to other areas, and the foot traffic will slow and stop. Later, the rents will come down.


Interesting you mention that place. MY former boss from two decades ago started Rocky's Pizza - his first shop was Emerald Hill. Rocky's was wildly successful (Singapore's first 'real' pizza place). His landlord TRIPLED the rent on him - so he shut down and moved - much to the LL dismay.

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Re: Rental Increase

Postby ecureilx » Mon, 06 Jan 2014 3:35 pm

PNGMK wrote:
zzm9980 wrote:
earthfriendly wrote:Wow, these high rental increases are driving out the businesses.


http://www.soshiok.com/content/rentals-businesses-out


That's how the free-market works. As greedy landlords try to squeeze our more rental dollars, they'll also shoot themselves in the foot. Trendy little shops that make areas like Ann Siang Hill desirable (and thus high rent) will be pushed out to other areas, and the foot traffic will slow and stop. Later, the rents will come down.


Interesting you mention that place. MY former boss from two decades ago started Rocky's Pizza - his first shop was Emerald Hill. Rocky's was wildly successful (Singapore's first 'real' pizza place). His landlord TRIPLED the rent on him - so he shut down and moved - much to the LL dismay.


most likely the landlord was a dummy .. and the actual landlord may not know what's happening .. the dummy has no qualms in trying to kill the golden egg laying goose

I wrote before of a restaurant bar, where rental tripled, as some other tenants were eying the place, so after 10 years, tenant packed up, made sure interior was totally trashed and left blank - and suddenly no interest from the other parties .. and the place was closed for more than a year, and then rented out for rental lower than the previous tenant's last rental.. not that the 'landlord' cared much about the place being vacant ..

happens here all the time, especially for the properties that belong to 'investors' .. who have parked $ here ..

alas, there is no end to this vicious circle

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Re: Rental Increase

Postby nakatago » Mon, 06 Jan 2014 3:40 pm

PNGMK wrote:Interesting you mention that place. MY former boss from two decades ago started Rocky's Pizza - his first shop was Emerald Hill. Rocky's was wildly successful (Singapore's first 'real' pizza place). His landlord TRIPLED the rent on him - so he shut down and moved - much to the LL dismay.


Two words:

Golden Goose.

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Postby x9200 » Mon, 06 Jan 2014 3:50 pm

What is the worst in this, that middle-term and maybe even long-term such LLs are just fine. If he didn't triple he would probably lose his face in the eyes of some of his friends/colleagues and just killing the business in this place he likely continued his rental with a new tenant for some more reasonable amount, just like he should have done with the one he killed. I bet in majority cases like this the only loser is the tenant.

Do you really see any places getting deserted because of such LLs? Greed is blind and they have not much to lose being greed. They may only feel some impact after a decade or so. They will not kill the tenant after 2 years, because they will think he is not doing yet good enough to milk him and when the right time comes (someone else success triggered greed) and the client will be doing good so will be the reputation of this place attracting new replacement clients.

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Postby ecureilx » Mon, 06 Jan 2014 4:25 pm

x9200 wrote: ...


what you are missing is, from a few cases I saw, atleast a few of the landlords are actually dummies for overseas investors.. and the 'investors' have too much money, they don't care .. when they can't account how they got the money in the first place :)

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Postby earthfriendly » Tue, 07 Jan 2014 1:00 am

I think the free market economy works well if the participants act wisely. It is easy to get caught up in the euphoria of the ups and downs of the market. Reminds me of the stock market where people chase sexy investments or try to time the market.

In the long term, this kind of yoyo dealings do not benefit anyone. Tenant turnovers are costly for the landlords and it takes time away for the day-to-day operation stuff. It takes time to build up a clientale and the bakery is on the right track (and the landlord can just sit back, relax and enjoy the steady stream of income :cool: . Now the landlord has to live with the uncertainty of the next tenant whereas the existing one has a track record). And for the tenant, she has to move out and re-establish the biz somewhere else. As for the customers, they are not served when a well-liked bakery disappear from their neighborhood. Aiming for a sustainable model would be a more efficient way. And everyone sleeps easier at night .

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Postby zzm9980 » Tue, 07 Jan 2014 9:45 am

earthfriendly wrote:I think the free market economy works well if the participants act wisely. It is easy to get caught up in the euphoria of the ups and downs of the market. Reminds me of the stock market where people chase sexy investments or try to time the market.

In the long term, this kind of yoyo dealings do not benefit anyone. Tenant turnovers are costly for the landlords and it takes time away for the day-to-day operation stuff. It takes time to build up a clientale and the bakery is on the right track (and the landlord can just sit back, relax and enjoy the steady stream of income :cool: . Now the landlord has to live with the uncertainty of the next tenant whereas the existing one has a track record). And for the tenant, she has to move out and re-establish the biz somewhere else. As for the customers, they are not served when a well-liked bakery disappear from their neighborhood. Aiming for a sustainable model would be a more efficient way. And everyone sleeps easier at night .


Apparently the landlord (or investor) disagrees with you. :) Despite the inconvenience to us plebes, this is obviously the more financially prudent move for their interests.

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Postby ecureilx » Tue, 07 Jan 2014 9:57 am

earthfriendly wrote:In the long term, this kind of yoyo dealings do not benefit anyone. Tenant turnovers are costly for the landlords and it takes time away for the day-to-day operation stuff. ...


Not true .. it works fine or even better for the agent, who can capitalise on the fees for this and that, and many an agent is a proxy for the landlord ..

so why would they care much as long as they get paid, a-la Stock exchange brokers ??:)

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Postby earthfriendly » Tue, 07 Jan 2014 11:28 am

The agents did not cross my mind. Yeap, definitely, just like the stockbrokers / investment advisers working on commissions. But then, the agents do not have vested interests. Just intermediaries.

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Postby Wd40 » Tue, 07 Jan 2014 11:30 am

The problem is not free market economy. Free market economy works in many places in the world, developed and developing. The problem with Singapore is the rate of growth of real estate/rental prices far outgrows all other kinds of investment asset classes or businesses, due to controlled and limited new real estate supply. Considering that Singapore is business friendly and very open anyone can start a business here. Which means lots of competition and lowest margins compared to other places. Thats the deadly cocktail.

In other countries with high growth like India, there is also high wage growth, so businesses can pass on the costs to consumers. In Singapore, there is 0 wage growth or even negative real wage growth. So there is lots of mismatch here.

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Postby ecureilx » Tue, 07 Jan 2014 12:51 pm

earthfriendly wrote:The agents did not cross my mind. Yeap, definitely, just like the stockbrokers / investment advisers working on commissions. But then, the agents do not have vested interests. Just intermediaries.


I remember the time an ex-boss of mine was trying to sell his property, about 3.8 MIL, and the agent was adamant he should hold it as she forecast price to go up to 4.5 MIL ..

And every other day there was news that it is going up .. don't sell .. and so and so .. until one day the owner told the agent he will hold the house, but if the price goes down below 3.8 MIL, she will cover the cost difference, and if it goes above 3.8 MIL, she gets 50% of the money made on top of the 3.8 MIL..

She didn't expect that kind of offer. . till my ex-boss told her "for you, at 3.8 MIL, you get your 5% or 3.8, at 4.5 mil - you still get 5%, so you only see the possibility of another 35,000 or so more in commission .. while you offload the risk to me ..

if you don't want to share the risk, stop being my financial advisor .. and just do your job .. unless you want to be risk sharing partner ..

I think that was the last deal he did with her as she termed him as a difficult landlord .. :D

She did make her money when the guy was doing his property buying/selling .. and she knew the writing on the wall - he was moving out of property business in Singapore !!!!

Wd40 wrote:In other countries with high growth like India, there is also high wage growth, so businesses can pass on the costs to consumers. In Singapore, there is 0 wage growth or even negative real wage growth. So there is lots of mismatch here.


then again, a lot of money is still flowing into Singapore, from .. India ?? :D :D

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Postby earthfriendly » Tue, 18 Mar 2014 3:05 am



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