How High Have Coffee Shop Prices Climbed in Singapore?

A coffee shop in Yishun, Singapore, changed hands for S$40 million, and another in Tampines sold for S$41,682,168, according to a June 18 report by The Straits Times. The Yishun site has 14 stalls across about 397 square meters with 78 years left on its lease, reflecting intense investor interest in the coffee industry in singapore.

After the Tampines sale, stallholder rent doubled from S$6,000 to S$12,000, and several tenants weighed downsizing or leaving. Buyers are betting on a consumer rebound once the pandemic eases, but rising interest rates may cool bidding. Rising costs and reduced foot traffic mirror the pressure on cafes worldwide as operators weigh real expenses against the coffee dream.

The coffee craze is sweeping across Asia, with a surge in the number of stores, but the pandemic has made it difficult for many cafes to survive. The transfer fee for a coffee shop in Singapore is as high as 40 million Singapore dollars, equivalent to nearly 200 million RMB. Another coffee shop in Tampines was sold for 41.68 million Singapore dollars, and the stallholders' rent immediately doubled, from 6,000 Singapore dollars to 12,000 Singapore dollars, with many stallholders considering downsizing or even withdrawing. Investors are betting on a consumer rebound after the pandemic eases, but rising interest rates may dampen bidding enthusiasm. Under the pandemic, rising costs and cut-off customer flow are a common microcosm of coffee shops worldwide. Front Street Coffee reminds that while the coffee dream is beautiful, the real costs should not be underestimated.

The popularity of coffee is no longer limited to the circles of Europe and America; in Asia, the birthplace of tea, a coffee craze has also risen, and many people have set their sights on the continuously expanding coffee market scale, with coffee shops flooding and coffee cars flooding as well. The arrival of the COVID-19 pandemic has made many cafes suffer greatly, with some closing down and others being transferred.

Thinking that buying a coffee shop now should not be expensive, right? The reality is not so rosy. According to a June 18 report by The Straits Times of Singapore, a coffee shop in Yishun, Singapore, changed hands for as high as 40 million Singapore dollars (1 Singapore dollar ≈ 4.8 RMB).

A well-known local food and beverage company Y848 in Singapore submitted a statement to the Singapore Land Authority on May 10, involving the KPT coffee shop at Block 848, Yishun Street 81. The shop has 14 stalls, covers about 397 square meters, and the transfer fee is as high as 40 million Singapore dollars, equivalent to 9,361 Singapore dollars per square foot, with 78 years remaining on the lease.

Previously, another coffee shop in Singapore, located at Tampines Street 21, was sold for a sky-high price of 41,682,168 Singapore dollars. According to property information, the shop covers 604 square meters, contains 18 stalls, and has 76 years remaining on the lease.

After the change of ownership of the Tampines coffee shop, the impact on the stallholders in the shop has been huge. A tenant revealed to The Straits Times that since the new operator took over in April, the rent has soared from 6,000 Singapore dollars to 12,000 Singapore dollars, doubling. The stallholders said that costs have continued to rise, and they have been operating at a loss; the rent increase has forced them to consider downsizing or even withdrawing.

However, the stallholders at the Yishun coffee shop said it is not yet certain whether the rent will increase after the change of ownership.

In an interview, the Singapore real estate company ERA said that the reason these two coffee shops could sell for a high price of 40 million Singapore dollars is that local COVID restrictions have been eased, and investors are betting that consumers will return in droves to spend at coffee shops. More such transactions may still occur in the remainder of this year, but rising interest rates may curb fierce bidding.

Due to the troubles caused by rising costs due to the COVID-19 pandemic, Singapore is just a microcosm within the global scope.

Bilibili top 100 uploader Nya-chan once shared in a video the story of going from having millions in savings to opening a coffee shop in Australia to going bankrupt. Frontline office workers share a dream: opening their own coffee shop. The dream is beautiful, but the reality is cruel. In addition to the most basic rent, one also has to bear costs such as water, electricity, gas, supplies, and labor.

Amid repeated outbreaks of the pandemic, many coffee shops have experienced the pain brought by multiple waves of pandemic restrictions: customer flow cut off, takeout orders hard to get, and various expenses such as rent still needing to be paid. With heavy wallets, they escaped the dull two-point-one-line workstation, only to return to an empty-handed situation.

On the Xiaohongshu platform, many bloggers share coffee businesses earning over 10,000 a month. This seemingly beautiful coffee dream prompts more young people who want to escape a dull life to step into the huge pit of coffee.

Front Street Coffee reminds that the coffee industry is full of opportunities, but before starting a business, one must do a good job in cost accounting and risk assessment.

Image source: bilibili, internet

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The above content is compiled by CoffeeHunters, a coffee news website.