Causeway Bay's retail vacancy rate to soar, with one in 10 shops standing empty as Hong Kong's street rallies enter their 15th week

By Lam Ka-sing and Holly Chik / | September 26, 2019 10:38 AM SGT
One in every 10 shops in Causeway Bay now stands empty, as three months of protest rallies have deterred visitors from the world's most expensive shopping district, adding to the woes of a retail industry that is already suffering from a weakening yuan and mainland China's abolition of luxury tax.
As many as 102 shops stood empty out of 1,087 in August in the district, or a vacancy rate of 9.4 per cent, according to data by the real estate agency Midland IC&I, which noted that the tenant-free rate may rise to 11 per cent next year, as "sentiment is worsening quickly" in the city.
"The prospect is quite critical. In my many years of dealing [with] shops, this is even worse than the Sars [outbreak] because the scale of the retail industry was not as large" during the 2003 outbreak of the severe acute respiratory syndrome, said Midland IC&I's director Tony Lo.
More than 600 shops may empty out by next year, according to Lo's forecast, putting hundreds of staff out of work in an economy that US bank Morgan Stanley said could contract in 2019, after tourist arrivals to Hong Kong shrank 40 per cent in August. That prospect could drive retail rental charges down by 30 per cent.
"There will be more than 600 vacant shops in four core districts next year," which would be a 38 per cent jump from August if the vacancy rate surpasses 2017's record of 664, said Lo, attributing the slump to a combination of the "political conflicts that have persisted" with the year-long US-China trade war, depreciation of the yuan that dampened mainland visitors' desire to spend and difficulty to hire workers under high salary cost.
"The [number of] businesses that want to lease have fallen and many have suspended their opening plans because they are unsure how long the political incident will last," he said. "Withdrawals from committed leasing is showing signs of worsening."
Map of protest rally that took place in Causeway Bay on June 19, 2019. SCMP Graphics alt=Map of protest rally that took place in Causeway Bay on June 19, 2019. SCMP Graphics