As Singapore’s public housing authority, the Housing & Development Board (HDB) plans and develops Singapore’s housing estates. One of their many functions is renting out commercial amenities in HDB towns. To create a better living environment for all Singaporeans, HDB has, since 2018, begun renting shops under the Price-Quality Method (PQM).
The Price-Quality Method Aims to Better Meet The Needs Of Residents
The Price-Quality Method ensures that new tenders do not just go to the highest bidder, but to proposals that meet HDB’s qualitative criteria. In 2023, about half of HDB’s new tenders were Price-Quality Method tenders. This ensures that the specific needs of the residents are considered, which is important since most PQM tenders are for shops located within new generation neighbourhood centres.
HDB’s new generation neighbourhood centres incorporate plazas, play areas, and other community spaces. The goal is to enliven the place with events and activities, so to tender successfully, potential shop owners must state in their tender documents how their shop will provide for the needs of residents.
Under the Price-Quality Method, the weightage given to the tender price (i.e. the rental bid) is lowered to 40%, while the Quality of the Proposal has a higher weightage of 60%. This means that tenders for shops that embody the heritage and culture of their neighbourhoods are more likely to succeed, even if their rental bid is lower.
The Price-Quality Method Applies To Different Types Of Shops
Since 2023, to ensure a greater diversity of businesses catering to residents, HDB has extended the Price-Quality Method to tenders of various shops, including:
- Larger shop spaces at existing Town Centres and Neighbourhood Centres.
- Sites with high heritage value, such as Conservation Areas like Tiong Bahru.
- Precinct minimarts at selected locations, especially areas where supermarkets are limited, or in precincts with a higher concentration of elderly residents.
- Shops that are returned to HDB at the expiry of 30-year leases – this applies to about 730 such shops, and their leases expire between 2024 and 2045.
These types of shops are in addition to precinct supermarkets, and eating houses which have already been subject to the PQM since before 2023.
Scoring Criteria For Price-Quality Method Tenders
There are five qualitative scoring criteria for PQM tenders. They are:
- Business Concept and Affordability
- Design and Layout
- Operations and Productivity
- Track Record
- Community-centric Initiatives or Local Character
While the total quality score always adds up to 60%, each of these criteria is weighted differently depending on the type of shop.
| Shops in Town Centres / Neighbourhood Centres | Heritage shops / Shops that will be returned to HDB | Precinct Supermarkets / Coffeeshops | |
| Business Concept and Affordability | 35% | 35% | 45% |
| Design and Layout | 10% | – | – |
| Operations and Productivity | 5% | 5% | 5% |
| Track Record | 5% | 10% | 5% |
| Community-centric Initiatives or Local Character | 5% | 10% | 5% |
| Total Quality Score | 60% | 60% | 60% |
| Total Price Score | 40% | 40% | 40% |
| Total Score | 100% | 100% | 100% |
Based on the table, the shop’s design and layout are more important criteria for shops in general in town centres and neighbourhood centres. For shops with high heritage value, however, priority is given to their track record and local character. The main priority for supermarkets and eating places is their business concept and affordability. Supermarkets, for example, will be rewarded with a higher score if they offer budget brand items, to ensure consumers can afford essential groceries.
The Price-Quality Method Ensures Lowers Rental Bids
Singapore’s retail industry is facing more challenges than ever. Competition from e-commerce, and worker shortages aside, rising rental costs have also been an ongoing cause for concern. HDB has the opportunity to ensure tenders for HDB shops are not evaluated solely on rental bids.
Read Also: Rent Hikes: Why Landlords Are Not Always To Blame
The PQM’s lower emphasis on pricing allows shopowners the opportunity to propose unique retail opportunities without worrying about how rental will adversely affect their operating costs.
Earlier in August, Bridgepoint Health successfully tendered for a clinic space of about 100 square metres. Their winning bid was just $18,000. This clinic space in Bartley Beacon was the first tender under the PQM. At just $180 per square metre, it is significantly lower than the average awarded bid of $382 per square metre for other clinic tenders in new housing projects. Earlier in March, a clinic in Tampines had won a bid with a monthly rental of $52,188, which translated to over $1,000 per square metre.
Read Also: $52,188 A Month For A GP Clinic In Tampines. Should The Government Be Worried?
Under the PQM, Bridgepoint Health had to commit to providing basic ancillary services onsite at the Bartley Beacon location, including diabetic retinal photography (DRP), diabetic foot screening (DFS), and nurse counselling for diabetic patients.
Three additional general practitioner clinic tenders will be launched under this PQM framework this year. The vision is that the PQM ensures quality and affordable healthcare services for residents by keeping rentals low.
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