Property Herald: Will the new 6-year lease of HDB shops result in sensible bidding?

Source: Google

Introduction

The Housing and Development Board (HDB) announced on Saturday, 10 January 2026, a change in the tenancy duration of rental shops leased out by the HDB in future tenders. Going forward, all successful bidders of all HDB shop tenders must maintain their tendered rent for two tenancy terms (i.e. 6 years), instead of the current one tenancy term of 3 years. By requiring tenderers to commit to rent over a longer period, HDB aims to encourage tenderers to bid prudently.

In my opinion

Although HDB’s intension to curb the overzealously high bids in government shop tenders is a praiseworthy one, the requirement for retail shop tenants to bid for a 6-year lease, instead of a 3-year one, would not necessarily result in prudent bidding in future HDB rental shop tenders.

The new 6-year tenancy may prompt most tenants to bid rationally. However, this new rule would not eliminate the occurrence of eye-watering high bids because all it takes is one bidder who is either overly bullish or mis-calculated to submit a sky-high rental bid in a HDB tender.

Like the Government Land Sale (GLS) tenders, the HDB shop tender will be awarded to the bidder who submit the highest bid. There is no silver medal for second place. Such tender process will encourage aggressive bidding among a handful of bidders even during normal market condition.

Based on my understanding, there is no penalty for HDB shop tenants who prematurely terminate the tenancy before the end of the 6-year lease. In this case, some tenants could still bid aggressively high rentals during the HDB tender for the shop. Subsequently, when they feel the bite of the high rental costs, they could back out and return the shop to HDB before the end of the 6-year tenancy without penalty.

Another factor that some retail shop tenants may consider when placing high bids is to get the first-mover advantage for shops in popular locations, such as those with Prime and Plus flats.

Some retail shop tenants may think that since the buyers can afford Plus and Prime flats, which are more expensive than the HDB Standard flats, they would also have bigger shopping budgets. Furthermore, these HDB owners must live in the Prime and Plus flats for at least 10 years to fulfil the Minimum Occupation Period, making the flat owners a captive pool of consumers with thicker wallets.

A 6-year HDB shop lease is still shorter than a 10-year MOP (Minimum Occupation Period), so the thinking goes. Therefore, the government would still need to consider other measures to encourage prudent bidding in tenders for HDB shop and in due course, for GLS sites.