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Greater retail rental transparency soon
RETAILERS and landlords can look forward to greater retail rental transparency after the details of the Fair Tenancy Consideration Framework are unveiled, probably this month. The framework will comprise three components: data transparency, education and awareness, and a mediation process.
The first component will make retail rent data transparent, likely pegged to street names, with a rough gauge of the size of the shop unit.
"We tried to push for more rent details which give better transparency (down to per square foot rental)," said Kurt Wee, president of the Association of Small and Medium Enterprises (ASME). "But I think it's not going to be easy to extract this data . . . If we ever want full transparency, we are talking about a new data bank. This means for every lease you sign, you have to fill up a set of obligatory information and file it with a certain data bank.
"So I wouldn't say we've got 100 per cent of what we need to perfectly protect an SME. But this is an effort that the different associations are all very collaborative in, and it's an effort by the industry at large."
On the education front, contract templates have been drawn up.
"Some landlords can be SMEs and have no idea what to put in their contracts," said Victor Tay, the Singapore Business Federation's (SBF) chief operating officer.
"This will be a simple industry-level tenancy contract which they can adhere to. The working committee led by Cynthia Phua is supported by associations like ASME, the Restaurant Association of Singapore (RAS) and the Singapore Retailers Association (SRA), and has made reference to the UK and Australian models."
A series of guides will also be unveiled. "Some landlords have certain clauses in their contracts . . . which tenants are not familiar with or which they misunderstand," said Mr Tay.
"Perhaps (the contract has a clause which states that) the retailer cannot set up shop within 1km of the landlord's building. In this case, some tenants will say 'I will take this (clause if you) give me lower rental'. In this case, the tenant must understand the restriction of this 1km radius. If you're a fast-moving consumer retailing model like 7-11 or McDonald's - which requires multiple locations close to each other, based on consumer density to augment your branding - you may face expansion issues.
"The guide aims to show what the commonly used tenancy terms mean and if you ever undertake this, you might want to rethink how this impacts your business in the future," said Mr Tay.
Said ASME's Mr Wee: "This is a helpful guide for you if you want to talk about leasing and rents, the mechanisms that you need to understand before you sign your lease. It's our job to also get the SMEs educated, or better informed in this space as well."
The final component is the mediation process, which will likely be handled by official channels. More details of the three components will be unveiled at the end of the month.
Mr Wee added: "It's something that is important and significant, short of legislation. And you don't really want to have to go that way because that may artificially regulate supply and demand. So it is our hope that when this framework comes out, it will moderate excessive behaviour and create a more sustainable relationship between landlords and tenants."