Singapore Expats

Hi,

We looking to start a small business in a shopping mall and our future landlord is looking to charge us a % of future earnings.

Is this regular practice in Singapore? How much do they normally want? Seems a bit crazy to me!

Oliver

Are you starting a food business in a food court?
or is it a small stall in a cluster of small stalls?

If yes to the above, then it is possible that the landlord will want to share profit,
What % does he want?

If you want better opinions and advise, please kindly give more details.
Location?
Type of business?
Rental Lease duration?

Not food related. It's a small fitness/health type studio in your regular 3 story shopping mall. 3yr least and asking for a 3%...

olivergm wrote:Not food related. It's a small fitness/health type studio in your regular 3 story shopping mall. 3yr least and asking for a 3%...

In singapore, the trend is - for service products, to ask for a % of the takings - unlike for goods sales - GENERALLY !!!

But - anyway, I know for a fact, some properties owned by Capital land have this policy - and a friend runnign a camera shop had to pay 15% of his takings ..

% of revenue practice also for shops in Changi Airport.

Pros & cons: generally landlord would be more keen to help you boost revenues as they have a share and you may be able to nego lower fixed rent for higher % share of revenue. Tradeoff is you could end up paying more than fixed rent if your business is really good.

farnho wrote:Pros & cons: generally landlord would be more keen to help you boost revenues as they have a share and you may be able to nego lower fixed rent for higher % share of revenue.

In theory, yes. In Reality, with a booming property market - most owners don't give a about it - that's from experience

Singapore is yet to see owners run co-ordinated marketing campaigns - most are just ad-hoc on the fly jobs, and for which all tenants are fleeced and the returns are not great ..

Some landlords are even into 'ancillary' services - so much so, even banners / name boards, even business cards must be approved and purchased from their 'preferred' supplier, who's price is more than double of market rate - extra posters in-house too are not allowed - apparently to the policy of not creating eye-sores ..

All because the landlords dictate terms .. Rarely the tenants fix their terms ..

And a couple of friends, who run service outlets, are forced to close existing outlets and open new outlets in new locations almost every two years - simply - when the market goes up - landlords jacks up the price, sometimes by upto 300% .. and one of the outlets - which had been residing for 8 years, with contractual 10% increase per year - had no mercy from a landlord - who insisted on revising the rental by 100% and when the tenant packed up, the landlord left the place closed for upto 6 months as his bets failed, and then meekly rented out the place to another tenant for less than half of what the previous tenant was renting it ..

in my eyes, most landlord are hardcore gamblers or it is OPM (other people money) so profit is #1 priority and all else come last ..

So there you go

ecureilx wrote:

farnho wrote:Pros & cons: generally landlord would be more keen to help you boost revenues as they have a share and you may be able to nego lower fixed rent for higher % share of revenue.

In theory, yes. In Reality, with a booming property market - most owners don't give a about it - that's from experience

Singapore is yet to see owners run co-ordinated marketing campaigns - most are just ad-hoc on the fly jobs, and for which all tenants are fleeced and the returns are not great ..

Some landlords are even into 'ancillary' services - so much so, even banners / name boards, even business cards must be approved and purchased from their 'preferred' supplier, who's price is more than double of market rate - extra posters in-house too are not allowed - apparently to the policy of not creating eye-sores ..

All because the landlords dictate terms .. Rarely the tenants fix their terms ..

And a couple of friends, who run service outlets, are forced to close existing outlets and open new outlets in new locations almost every two years - simply - when the market goes up - landlords jacks up the price, sometimes by upto 300% .. and one of the outlets - which had been residing for 8 years, with contractual 10% increase per year - had no mercy from a landlord - who insisted on revising the rental by 100% and when the tenant packed up, the landlord left the place closed for upto 6 months as his bets failed, and then meekly rented out the place to another tenant for less than half of what the previous tenant was renting it ..

in my eyes, most landlord are hardcore gamblers or it is OPM (other people money) so profit is #1 priority and all else come last ..

So there you go

Actually some landlords are exactly as you said. my neighbor office room is about 2 years, still not rent out. why? his office located at the edge of corridor with a staircase inside. it is very difficult to utilize space due to irregular shape of room. Previous tenant(Wellness related) gave her a good price but only one year terminated. no customer! but landlord still want higher rental than previous tenant because she think all the property price grow why not her? you can imagine it, still not rent out after some time i passed there, already two years now!

No shortage of stupid people in this world.

Usually the percentage is negotiable with the base rental.

$4000 + 3% of GTO or
$5000 + 1%

But suffice to say that this is standard practice, though 15% of turnover sounds pretty absurd.