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Revitalisation of Shops scheme: Can it affect flat values?

September 23, 2016
The Revitalisation of Shops (ROS) scheme. set up by HDB, aims to financially assist struggling heartland provision shops

The Revitalisation of Shops (ROS) scheme. set up by HDB, aims to financially assist struggling heartland provision shops

We often talk about the importance of amenities, in determining the prices of resale flats. So it’s unusual that one key topic has flown under the radar: the recent Revitalisation of Shops (ROS) project, which started under the Budget this year. Resale flat owners, as well as buyers, would do well to take note:

What is the Revitalisation of Shops (ROS) scheme?

The ROS is an initiative by the Housing Development Board (HDB) to revive fading heartland shops.

The Revitalisation of Shops scheme provides an “upgrading budget” of $35,000 per shop (previously this was $20,000), where the shop owner only pays 20 percent of the cost, to a cap of $5,000. The rest will be paid by the relevant town council. For shop spaces that are being rented, HDB and the town council pay for the entirety of upgrading costs.

The Revitalisation of Shops scheme also supports Merchants’ Associations (MAs), of which most heartland shops are members. MAs will only pay 50 percent of the costs of promotional events now, to an annual cap of S$500 per shop ($1,000 for rented shops).

Furthermore, those with rented shops will get a concession of one month’s rent (because they can’t operate while upgrading takes place).

Why does it matter?

The situation facing heartland shops is dismal. In a Straits Times interview, Mr Peter Lai, Vice-President of the Federation of Merchants’ Associations (FMAS), estimated a three to five percent vacancy rate in his neighbourhood shops.

Heartland shops were the centre of HDB living, right up till the early 2000s. Examples are the mama shops, neighbourhood hair salons, and convenience stores that can be found below your flat. These used to form an integral part of HDB living, for reasons explained below.

Toward the early 2000’s, a combination of large chain businesses and malls began to erode their business. For example, chain supermarkets like Sheng Siong and NTUC Fairprice began to replace individually owned minimarts.

Another source of lost business came from our attempt to create more self-sustaining neighbourhoods. To Singaporeans, this means malls, and despite our malls proliferating everywhere, a neighbourhood is still considered incomplete without one. Suburban malls bring with them services (hair salons and spas) and retail (clothes, electronics, groceries) that are in direct competition with heartland shops.

But does it matter if we lose them? The answer is “yes, a whole lot”. Because heartland shops provide more than just amenities. They also serve as:

  • Community binders
  • Affordable amenities
  • Property value enhancers
  1. Community binders

In Singapore, heartland malls serve a crucial function besides providing a cheaper alternative for your haircut or toiletries. They act as a binding agent for the community.

Now this is not – and perhaps never again – will be as apparent as it was in the 1980s and before. Older readers may remember that shopkeepers were the CNN of the neighbourhood; if you got into a fight or played truant, your mum probably heard it from the shopkeeper. If your 11 year old  ran out of pocket money and came home hungry, the minimart owner would feed your kid (and sometimes not mind if you didn’t pay them back).

We’ve gone past the days of playing caroms with the neighbourhood barber, but even now heartland shops help to maintain the community. The MAs are still a major force for local events – whether it’s senior citizens’ day or a New Year event, these are the entities that still bother knocking on doors to invite you.

The nature of the personal relationships with residents can’t be replaced by malls, or chain stores. The cashier at the mall will never know your name, and the mall’s events are organised by managers who’ve probably never set foot in the neighbourhood.

  1. Affordable amenities

If you’re living on a budget, neighbourhood malls are virtually useless as amenities. We’re often so caught up with the idea of high-end amenities, we forget the practical dimension: it may be awesome to have a Din Tai Fung or Manhattan Fish Market next door, but how often can you afford to eat there?

You have a Tierney’s in your neighbourhood mall? That’s great, but how’s your grocery budget doing, with those pricey European imports?

The rental rates of a mall, even a suburban one, are usually so high that day-to-day items can’t be priced at heartland shop rates. This also includes services – haircuts under $10, or tailoring services that don’t cost your first child’s university fees, are hard to find in malls. Another big reason our heartland shops need to stay open.

  1. Property value enhancers

A wide range of bustling heartland shops, that are widely utilised, do help property values. You may not see the direct connection, but remember: the more the amenities bind the community, the better they are at enabling collective action.

A shopping mall just sells you stuff. The management is seldom interested in rallying the locals, to push for more park spaces or a new anti-littering drive (if they do so, they tend to make such decisions in isolation of the greater public). Heartland shops, which have a vested interest in the neighbourhood’s health, are more motivated to do it.

A neighbourhood with a strong community is often safer, cleaner, and more vociferous in handling its town council. All of that is great for property value.

The affordability of heartland shops is also of no small consideration. We don’t want to appear snobbish, but it’s a simple financial fact that HDB dwellers see convenience differently from condo dwellers. When your budget is smaller, an expensive amenity is as almost good as no amenity. That will factor into the consideration of a buyer, who’s interested in your resale flat.

Check out the shops before you move in

So here’s a big tip-off: if you’re about to buy a resale flat, check out the local heartland shops. Most of the time, a happy community means busy HDB shops. You can browse some of the better resale options by district, on 99.co.

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