More landlords passing on full tax rebate to tenants

Source : Straits Times - 24 Jan 2009

LANDLORDS Mapletree and Lend Lease, which between them own and manage four shopping malls, announced yesterday that they would pass their government property tax rebate on to their tenants.

The 40 per cent rebate, for owners of industrial and commercial properties, is part of the $20.5 billion Resilience Package unveiled on Thursday by Finance Minister Tharman Shanmugaratnam. A key component of it is to help Singapore’s companies cut costs.

Government-linked CapitaLand, Singapore’s biggest landlord, was the first to announce the same day that it would pass the rebate down in full.

Australian property and financial services group Lend Lease will be doing likewise with every one of its estimated 350 tenants in Parkway Parade and PoMo, but declined to reveal how much each would receive because ‘complex calculations have yet to be made’, said a spokesman.

Mapletree, which manages VivoCity and HarbourFront Centre, will pass the rebate down too, but was unable to reveal how or how much.

Tenants in these malls are grateful, but wonder how much relief they could get from this.

According to Association of Small and Medium Enterprises president Lawrence Leow, they might expect at most a 4 per cent adjustment in rents, if landlords passed on the savings in full.

The rebate each tenant gets will also depend on factors such as demand for the shop space, when the lease was signed and the relationship between tenant and landlord. ‘It is a difficult process, and rebate amounts may even vary from tenant to tenant,’ said Mr Leow.

Feeling happier are retailers like Mr Jason Ng, who owns the Swee Heng Bakery chain, and whose landlord is the Housing Board. The government agency is one of four taking the lead in giving their tenants a 15 per cent rental rebate from Jan 1 to Dec 31 this year. The others are JTC Corporation, the Singapore Land Authority and the National Environment Agency.

The 34-year-old entrepreneur, who rents 12 shop spaces from the Housing Board, will save more than $150,000 this year because of it.

‘It is the right thing at the right time,’ said Mr Ng. ‘Now, let us just hope private landlords follow suit.’

Private landlords have not yet said if they will give other concessions on rent, so for now, shopkeepers are just taking what they can get.

Small businesses are feeling the squeeze of high non-negotiable rental contracts signed in good times on one hand and falling sales on the other.

Figures from the Ministry of Finance show more than 130 businesses closed down last year, nearly a 25 per cent jump over 2007.

The owner of Leather Ark in Parkway Parade, Ms Jean Yeo, said: ‘We have not received news from our landlord yet, but we are happy that they are doing this. It will be a relief in these bad times.’

Mr Charles Wong, owner of Charles & Keith, hopes the rebates would be fairly distributed and done fast. ‘We can then immediately plough it back to help us train staff and prepare for the recovery of the economy,’ he said.

The Singapore Retailer Association hopes that more landlords will respond this time around.

The association’s executive director, Ms Lau Chuen Wei, recalls that in 2003, $64 million worth of property tax rebates were handed out to commercial property owners, as part of the Sars relief package, but only a handful passed it on to a few retailers.

One example was Lend Lease, which gave 50 per cent of its rebate to tenants, and ploughed the other 50 into advertising and promotions.

Retailers like Mr Wong remember the disappointment.

The 35-year-old owner of a successful local brand said he ‘hardly benefited’ from the rebate in 2003, something that he hopes will change this time.