Business Maverick

Business Maverick

Hong Kong to See Biggest Fall in Retail Rents Since 2013

Riot police walk past a shuttered Sogo department store during a protest in the Tsim Sha Tsui district of Hong Kong, China, on Sunday, Dec. 1, 2019. China said it "strongly" opposed an op-ed by United Nations High Commissioner for Human Rights Michelle Bachelet, accusing her of meddling in the country's affairs and emboldening Hong Kong protesters to commit violence. Photographer: Justin Chin/Bloomberg

Rents in Hong Kong’s prime shopping districts will fall sharply in 2020, as the city’s retail sales experience the worst contraction ever amid lingering anti-government protests, according to Knight Frank.

Rents for street shops in areas including Central, Causeway Bay, Tsim Sha Tsui and Mong Kok will decline by 15% or more in the coming year, the biggest drop since 2013, said Helen Mak, a senior director at the property agency. “For foreign and local tenants, of course, they have to be cautious when deciding whether to open stores now, which weighs on rents,” she said.

The gloomy forecast came a day after the government announced that retail sales by value contracted by a record 24.3% in October from a year earlier. Hong Kong has been crippled by months of pro-democracy protests that have sometimes paralyzed the city.

A decline in visitors from mainland China isn’t helping either. That could persist into 2020 and hurt local retailers’ sales and profit, Catherine Lim, an analyst at Bloomberg Intelligence, said. Lower shop rents could ease the impact of sales declines on retail margins, Lim said.

If it materializes, the fall in rents may erode Hong Kong’s position as the world’s most expensive retail rental market. Street shops in Causeway Bay charged the highest rents in the world in the third quarter, at $2,544 per square foot a year, despite the demonstrations that started in June, according to Cushman & Wakefield Plc.


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