Bonjour says au revoir, the second major retailer to leave world's costliest high street in Causeway Bay amid protests

By Lam Ka-sing kasing.lam@scmp.com

/ https://www.scmp.com/property/hong-kong-china/article/3035576/bonjour-says-au-revoir-second-major-retailer-leave-worlds?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp |

November 26, 2019 11:57 AM SGT

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Hong Kong's Russell Street, the world's most expensive retail strip, is slipping fast from its perch, with rents falling by more than 50 per cent from their peak in 2013.

In the latest sign that the city's retailers are struggling to cope with the consequences of the more than five months long anti-government protests, cosmetics chain Bonjour Holdings has closed its outlet in the popular tourist district of Causeway Bay. In August, landlord Early Light International (Holdings) said that Italian fashion house Prada was closing its 15,000 square feet store in June next year.

"Their lease has expired. We have found a new tenant to immediately take it up," said Donald Cheung, executive director at Emperor International Holdings, owner of the shop. "It will be next month. [The rent] drops a bit, at about 15 per cent."

Bonjour signed the lease for the 3,068 sq ft shop in November 2015 for HK$1.6 million (US$204,098) a month " 42 per cent lower than the previous occupier, Cartier, which paid HK$2.76 million a month.

Italian fashion house Prada is closing its flagship store in Causeway Bay's Russell Street next June. Photo: Nora Tam alt=Italian fashion house Prada is closing its flagship store in Causeway Bay's Russell Street next June. Photo: Nora Tam

Now Chow Tai Fook, the world's largest listed jeweller, will rent the space for HK$1.3 million, 19 per cent lower than Bonjour. The rent for this particular shop has fallen by more than 52 per cent since 2013.

Bonjour did not respond to a request for comment.

"That place in Causeway Bay is now particularly bad," said Edwin Lee, founder and chief executive of Bridgeway Prime Shop Fund Management. "This strip for jewellery and watch shops back in 2013 cost HK$3,000 per sq ft [a month]. Now it has dropped 70 per cent [on average], I think."

The announcement comes as at least 30 listed retailers and restaurant operators, including Bonjour, Chow Tai Fook Jewellery, Best Mart 360, Tsui Wah, Cafe de Coral and Tai Hing have issued earnings warnings, notices of closures or posted downbeat operating results.

Bonjour recorded a net loss of HK$29.5 million for the six months ended June, compared to a net profit of HK$7.4 million a year earlier.

Emperor International said in an exchange filing last week that it expected to record a net loss for the six months ended September, compared to a net profit a year earlier because of "global political disputes and local social issues, which led to a tough business environment domestically, and hence downward pressure on both market retail and commercial rents".

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"With no resolution in sight [to the social unrest], we expect local consumption sentiment to remain weak and the number of inbound visitors to continue to drop," said David Ji, director and head of research and consultancy for Greater China at Knight Frank. "The retail environment in Hong Kong is expected to be extremely challenging during the remainder of the year despite the upcoming festive season."

Property agency Midland IC&I found that retail scene was deteriorating rapidly, which it attributed to the US-China trade war and the political upheaval. It found that occupants of some 145 shops, particularly restaurants, were seeking new tenants to take over their leases and equipment, up 11.5 per cent from August.

Tony Lo, director at Midland IC&I, said the number of restaurant operators that want their leases superseded was climbing continuously, and will continue over the next few months.

Meanwhile, owners of shops in Sham Shui Po, Wan Chai and Jordan, are desperate to offload their units, listing them much lower than their acquisition prices.

On Wednesday, a 400 sq ft shop in Sharp Street West in Wan Chai was sold at HK$13 million for a loss of HK$5.3 million, or 27.8 per cent lower than the acquisition price in March 2012.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

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