Outrage Over High Rent for HDB Clinic in Singapore
A recent headline has sparked surprise and anger among Singaporeans: a Housing Development Board (HDB) unit has been secured for a clinic with a staggering monthly rental of $52,000. This translates to over $600,000 annually.
Initial Reactions and News Coverage
Dr. Hisham first brought this to light on LinkedIn, expressing his shock at the "obscene" amount. Straight Stance subsequently interviewed Mr. Andrew Chim, the co-owner of iHealth Medical Holdings, which placed the winning bid. Chim defended the high rental, arguing that the location justifies the cost.
The Clinic and Its Owners
Mr. Chim, 37, co-owns iHealth Medical Holdings. The clinic space is only 500 square feet, equating to approximately $100 per square foot in Tampines Street 96, a heartland location. This raises questions, as similar rates are usually associated with prime areas like Paragon.
Further investigation revealed that Mr. Chim is an investor alongside Dr. Sean Lam (likely the lead doctor) and a friend's wife. Together, these four individuals own the company. The Tampines clinic will be iHealth Medical Holdings' fourth location, with existing clinics in Boon Keng, Serangoon, and Yishun.
iHealth Medical Holdings: Valuation and Revenue
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The company initially invested $250,000 to establish their first clinic.
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They have since raised funds from investors, reaching a valuation of $7 million.
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Their total monthly revenue exceeds $300,000, suggesting an average of over $100,000 per clinic.
The $7 million valuation raised eyebrows, particularly when compared to Healthway Medical, which was delisted for $66 million despite having over 100 clinics.
Justification for the High Rent
Mr. Chim justified the high rental by highlighting the clinic's location in the middle of Tampines West, with 5,000 Build-To-Order (BTO) households and upcoming developments like mixed-use projects and shopping malls. He anticipates a large patient catchment.
However, it's noteworthy that iHealth Medical Holdings' other clinics pay between $7,000 and $10,000 in rent. This raises the question of whether the Tampines location warrants a five-fold increase in rental costs.
Comparison to Other Clinic Rentals
Other recent HDB clinic rental agreements shed light on the situation:
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A unit in Toa Payoh went for $16,800.
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A unit in Tengah secured a rent of $40,088.
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Caring Medical Clinic won a bid in Tampines for $25,388 - significantly less than half of iHealth's bid.
These figures underscore the unusual nature of iHealth Medical Holdings' $52,188 bid.
Potential Impact on Patients
The concern is that the high rent will inevitably lead to increased medical costs for patients. To generate sufficient revenue, iHealth Medical Holdings likely needs to make around $150,000 monthly.
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Consultation fees at the new clinic will range from $30 to $35.
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This is considerably higher than the Singapore Medical Association's (SMA) guideline of $20 to $25 for short consultations.
To achieve the required revenue, the clinic anticipates seeing 70 to 90 patients daily, including weekends and public holidays.
Broader Implications: The Coffee Shop Analogy
The situation draws parallels to the rising rental costs experienced by coffee shop vendors, particularly those selling affordable food items like laksa. New owners often raise rents, forcing vendors to increase prices to cover expenses. This ultimately burdens consumers. Unchecked, escalating rents can lead to a detrimental inflationary spiral.
Conclusion: Are Bidding Wars Excessive in Heartlands?
The high rental costs for HDB units, exemplified by this clinic tender, raise questions about excessive bidding wars and their potential impact on consumers and local businesses. The incident highlights the pressing need to address rising costs in Singapore's heartlands to ensure affordability and accessibility for all.
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