Singapore Business Closures Rise, Landlords Face Takeover Risks

Escalating Business Closures

Singapore has experienced a significant increase in business closures this year. Over 38,000 commercial establishments ceased operations in the first seven months of 2026. This trend follows 60,000 business shutdowns recorded in 2025, a figure that surpassed the 42,463 closures seen during the 2020 Covid-19 pandemic.

The construction and food and beverage (F&B) sectors account for a substantial portion of these closures. Notable businesses that have shut down include indie cinema chain The Projector, cupcake chain Twelve Cupcakes, F&B establishments like The Providore, and Australian tea chain T2 Tea. Fitness chain True Group's subsidiaries also entered provisional liquidation in September 2026.

Takeovers and Landlord Vulnerabilities

Many small businesses often attempt to sell their operations before fully winding up. These business takeovers, particularly when involving rented premises, introduce additional risks for landlords. Under Singapore's "privity of contract" rule, only the original parties to a lease agreement can enforce their rights or obligations.

Samuel Yuen, managing director of Yuen Law, noted that a new buyer taking over assets has no legal standing against the landlord, who maintains the right to object to the takeover. Conversely, landlords face challenges acting against a new owner for lease breaches, as their recourse is typically against the original lessee.

Legal Safeguards and Complexities

Singapore company law, including the Insolvency, Restructuring and Dissolution Act 2018 (IRDA), addresses some of these risks. Section 224 of the IRDA allows liquidators to reverse undervalued transactions up to three years before a winding-up order if unfair preference is detected.

Lee Ee Yang, managing director of Covenant Chambers, added that individuals involved in "fraudulent trading" to siphon assets can face personal liability.

While a lease novation, which transfers all rights and responsibilities to a new party with written consent from all three parties (landlord, seller, buyer), offers a solution, Yuen described it as a "tall order" due to the difficulty in securing universal agreement.

Protecting Commercial Property Interests

To mitigate rent losses, landlords often implement preventive measures when the initial lease is signed. These include requesting a financially stronger parent or sister company as the lessee or securing guarantees in their favour. Personal guarantees from directors and controlling shareholders, along with security deposits or banker's guarantees, offer additional protection.

With many businesses for sale already in financial distress, landlords in Singapore must carefully review tenant solvency and lease transfer clauses to safeguard their commercial property investments amidst the rising number of closures.