Singapore’s smaller independent nurseries hit by rent hikes, rising costs after Covid-19

SINGAPORE – Montessori Children’s House kindergarten principal Carolyn Tan said the 40 per cent increase in monthly rent in 2023 was a relief for the facility.

The nursery, on Old Holland Road, was initially told its rent would increase by around 90 per cent but managed to negotiate a lower fee with its landlord.

Ms Tan said the sharp increase in 2023 came after rent was frozen during the Covid-19 pandemic. For the past 35 years, rent has typically increased by 10 to 15 per cent every two years for the kindergarten operator, which runs one centre with 42 children.

“We are at the mercy of our landlord. Moving would mean potentially losing our customer base, and we can’t just up and leave because most of our children live in this area,” Ms Tan said.

Montessori Children’s House is one of several smaller preschools that have struggled in recent years with rising rent and labor costs.

Seven such operators – each with one to five kindergartens – told The Straits Times that these challenges have been exacerbated by rent hikes following the pandemic.

These kindergartens still face strong competition from government-supported kindergartens, which offer teachers higher salaries and lower tuition fees, as well as from larger commercial kindergarten chains.

Independent preschools, which typically charge more than $1,000 a month, differ from mainstream operators and partner facilities, which receive government funding to ensure fees remain affordable.

By comparison, full-day childcare fees are capped at $680 at base operator-run centers and $720 at partner operator-run preschools. These fees will drop even further in 2025.

Some parents therefore moved their children to these centers.

So far, more than six in 10 pre-school children are enrolled in government-supported pre-schools, up from just half in 2019, according to the Early Childhood Development Agency (ECDA). This is set to rise to eight in 10 by 2025.

Rent increase

Rent has risen by almost 20 per cent at Blue Lion Preschool since it opened in Siglap four years ago. Principal Charmaine Teo said further increases could force the pre-school, which has 21 children, to leave its current building.

The preschool, which opened in 2020 during the pandemic, had just six children at the time. It took more than a year for enrollment to grow to 10, and another two years to reach 21 in 2023.

Fees were raised in January to keep up with rising costs, and the fee for full-day childcare is now $1,580 a month.

While it is becoming increasingly commercially unviable to run small pre-schools, Ms Teo said they are still important as they offer families the option of a “home away from home”.

In response to questions about the challenges facing independent pre-schools, an ECDA spokesperson said: “Independent operators wishing to set up pre-schools will need to rent space and negotiate rent rates directly with landlords, just like any other business.

“Operators may also participate in tenders for government facilities which are announced from time to time through public tender.”

The spokesman added that ECDA is working with the Housing Board to set up new kindergartens in almost all HDB Build-To-Order estates where there are more families with young children.

Most of these preschools are then allocated to major operators who provide affordable and high-quality preschool services to families.