In a detailed LinkedIn post on 9 June 2025, Ervin Yeo, Chief Strategy Officer of CapitaLand Group and CEO of Commercial Management at CapitaLand Investment (CLI), weighed in on growing public unease over rising retail rents in Singapore.
His remarks come amid recent outcries from small business owners and citizens, who have called for reforms including caps on lease renewals and restrictions on foreign investment in commercial property.
In a post titled “Put down the pitchforks for a moment and hear me out: Perspectives on Singapore Retail,” Yeo addressed proposals such as rent control, vacancy taxes, and additional costs for foreign brands.
He compared rent control to hawker centres, where artificially low rents sometimes lead to erratic operating hours, undermining customer trust.
“The flip side of rent control or pure turnover-tied rent is what we see in rent-controlled hawker centres—rents may be just a few hundred dollars, so stallholders open as and when they feel like it,” he said.
Yeo added that vacancy taxes would likely have limited impact, as most landlords are already incentivised to lease units swiftly due to mortgage obligations.
On restrictions against foreign brands, he argued that such proposals often implicitly target Chinese entrants, while Western brands are rarely scrutinised to the same extent.
He described the “卷” (hyper-competitive) nature of Chinese retail brands, which scale rapidly through highly efficient supply chains.
For Chinese F&B brands, expansion is driven by achieving minimum efficient scale—often between 20 to 100 stores—enabled by centralised logistics and kitchen operations.
Yeo shared that Singaporean brands visiting Shanghai were often stunned by how far China’s retail sector had advanced, acknowledging that this could create unease when large Chinese operators enter Singapore’s smaller market.
However, he urged Singapore to maintain its open, competitive ethos, rather than resorting to protectionism.
“Let’s retain our ‘bring it on’ mentality. This is our home ground, and we should focus on raising standards through fair competition,” he stated.
Yeo calls for temporary policy shift to support urban renewal amid economic headwinds
Yeo called for a diverse retail ecosystem comprising managed malls, strata malls, streetside shops, and hawker centres.
He criticised an emerging “anti-mall” sentiment as elitist and disconnected from everyday Singaporeans.
He emphasised that suburban malls in heartland areas such as Tampines, Jurong, and Choa Chu Kang have significantly improved accessibility and lifestyle quality.
Citing New Bahru—a creative reuse of an old school by The Lo & Behold Group—as a successful example, Yeo encouraged more projects using Price x Quality (PQ) tenders to foster sustainable development.
He highlighted that high land cost, not just rent, is a major contributor to business expenses.
“Yes, land tenders go toward our reserves, but high land prices inevitably translate into higher rents,” he noted.
Yeo pointed out that land now constitutes about 70% of development costs, compared to just 4% in the 1980s.
He proposed revisiting policies such as the Development Charge (DC), which was temporarily reduced to 50% during the 1985 recession but later reinstated to 70% in 2007.
DC is a fee paid by developers to the government when a building permit is issued, or when a building project receives planning permission, to help cover the costs of new infrastructure needed to support the development, such as roads, water, and sewage.
Given the backdrop of high interest rates, slower population growth, and a maturing economy, Yeo suggested a temporary DC reduction could encourage much-needed urban rejuvenation.
“We do not want to see Singapore aging in place, since newer buildings tend to be more efficient and energy sustainable. Land cost also has an inevitable effect on downstream rental rates. It is important to save for a rainy day, but there may be scope to right size the umbrella,” he said.
Yeo explains why ccupancy cost, not raw rent, is a better gauge of retail affordability
Yeo pointed out that retail rents in Singapore remain below pre-pandemic levels, with URA data showing declines of over 22% in central and suburban regions from 4Q2019 to 1Q2024.
He emphasised Occupancy Cost (OC) as a better measure of rent affordability, noting that average OCs for CapitaLand and Frasers REIT malls in 2024 were sustainable at 17.1% and 16% respectively.
Yeo also explained that retail sales have grown faster than rents since 2018, benefiting tenants on fixed leases during the post-Covid recovery.
On rental reversion, he clarified that CICT’s 8.8% reversion in 2024 reflects gradual increases in a subset of leases, far from the steep hikes seen in individually owned properties.
Rent hikes tied to market forces and acquisition costs, not profiteering, says Yeo
Yeo addressed a widely shared case involving Flor Patisserie, which reportedly faced a 57% rent increase.
He calculated, using transaction data and public records, that the new rent still yields only 3.18% for the landlord.
He explained that such rent hikes are often driven by broader market forces, including rising interest rates and the need for owners to realise sustainable returns after high-value acquisitions.
“Entry price makes all the difference,” Yeo noted, pointing out that buyers who pay high premiums naturally require higher rental yields.
He linked the issue to recent policy shifts, such as the 60% Additional Buyer’s Stamp Duty (ABSD) on foreign residential buyers, which has redirected investment toward commercial properties.
This trend has contributed to increased prices and demand for commercial units, indirectly pushing up rents.
Yeo stressed that rent is only one part of the cost equation. In the highly competitive F&B sector, sustainable revenue depends more on daily covers, average check sizes, and strong footfall.
CapitaLand malls, he said, attract nearly 400 million visits annually, making them key to tenant success.
“Foot traffic, not just rent, is what drives performance,” he asserted.
Manpower pressures and structural limitations
Yeo also highlighted manpower shortages and rising utility costs as key operational challenges. He noted that labour often constitutes a larger cost component than rent.
Citing Flor Patisserie’s breakdown showing 42.8% of costs attributed to staff, he warned that tightening foreign labour quotas and demographic shifts could worsen the strain.
Chain restaurants, Yeo suggested, are more resilient as they benefit from economies of scale and meet criteria for white-collar job creation under foreign labour rules.
He cited Oriental Kopi’s partnership with Paradise Group as a successful example, enabling shared kitchen and logistics infrastructure.
Manpower constraints, he said, also hinder Singapore’s ability to host premium international brands.
He mentioned challenges such as import restrictions on specific duck breeds essential to authentic Peking Duck, which have forced many Chinese brands to shift focus to hotpot or simplified models post-COVID.
He warned that Singapore risks losing out to regional competitors like Bangkok, which offer lower costs and smoother operations.
“Thailand has already overtaken Singapore as LVMH’s largest Southeast Asian market, thanks in part to vibrant cities like Phuket,” he observed.
While acknowledging rising business costs, Yeo cautioned against simplistic conclusions.
“Singapore remains attractive to investment so its not surprising that commercial unit transactions and prices have gone up, which coupled with higher interest rates, will have an impact on rents,” he said.
He concluded by warning that “clickbait articles” distract from the deeper, long-term conversation Singapore needs to have about its role as a regional retail hub.
“I sometimes wonder how sustainable it is for Singapore to be the safe haven of choice for some of the most populous countries in the world, like India, China, Indonesia,” he remarked.
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