Gaw Capital says Hong Kong protests affected renovation schedule of its newly opened mall
By Lam Ka-sing kasing.lam@scmp.com
/ https://www.scmp.com/property/hong-kong-china/article/3041886/gaw-capital-says-hong-kong-protests-have-hit-tenants-its?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp |
Hong Kong private equity fund Gaw Capital Partners, which owns and operates 29 shopping centres and car parks in the city, said that the ongoing protests have affected its tenants and renovation efforts.
Gary Wong Chi-him, public affairs and marketing director at Gaw Capital, said that "businesses in a few of our malls have been affected since the start of the third quarter and we will consider what discounts can be offered, [although] there is no one-off plan".
"Some tenants told me there were a lot fewer patrons. Because of the social movement, people have been going out less, particularly during the weekends," said Wong, adding that areas such as Wong Tai Sin have been affected more than others because of frequent clashes between police and protesters.
Gaw Capital and its partners have acquired the portfolio worth HK$35 billion (US$4.48 billion) worth of neighbourhood malls and car parks since March 2017.
Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants & Related Trades, recently said that shops and eateries had lost an estimated HK$10.5 billion worth of business between June and October.
He added that retailers were not particularly optimistic about the Christmas shopping season.
(From left) Gary Wong Chi-him, public affairs and marketing director at Gaw Capital, Patrick Leung Tai-loi, managing director of asset management, and Alvin Lo King-hei, senior director for asset management, outside the newly renovated Lai Kok Shopping Mall in Cheung Sha Wan. Photo: May Tse alt=(From left) Gary Wong Chi-him, public affairs and marketing director at Gaw Capital, Patrick Leung Tai-loi, managing director of asset management, and Alvin Lo King-hei, senior director for asset management, outside the newly renovated Lai Kok Shopping Mall in Cheung Sha Wan. Photo: May Tse
Gaw said that the protests had delayed the renovation of Lai Kok Shopping Centre in Cheung Sha Wan, the first of its 29 shopping centres to be overhauled. The work was to be completed in "early fourth quarter" but it was delayed to late November as some workers could not get to work and it took longer to complete, said Wong.
The company is renovating four other shopping centres. Wong said that although the work is expected to be completed in mid 2020, the completion date may be pushed back if the protests continue.
Gaw said that since acquiring Lai Kok Shopping Centre last year, it had increased the occupancy rate of the wet market wing from less than 20 per cent to full occupancy, helped by the HK$100 million plus renovation.
Before the overhaul, the mall had a reputation for poor maintenance and rat infestation. The previous owner was said to be unable to arrest dwindling footfall and shop closures as it continued to raise rents while neglecting its maintenance.
Gaw's shopping centre revamp comes at a time when the retail market continues to suffer.
"The US-China trade war and local political conflicts continue to affect the shop market, [as it is] crushing retail and catering businesses," said Tony Lo, director of Midland IC&I. "Although some investors bought shops when the market peaked some years ago, their value has plunged because of the poor market sentiment. Investors are pessimistic about the prospects of the leasing market so they have decided to offer shops at a loss."
Recent deals confirm the trend. Shop owner Chan Pui-chi made a loss of HK$1.5 million, or 25 per cent less than the original purchase price, selling her 572 square feet store in Sai Wan's Ava 128 development for HK$4.48 million on Thursday.
Also on Thursday, another buyer reneged on a HK$75 million deal signed in August to buy a 1,280 sq ft shop in Wan Chai's Lockhart Road.
Lo said that his company has seen more than 60 shops offered for a loss, with some owners repeatedly cutting the price. "It is expected that the situation will continue in the short term, and the number of loss-making transactions will continue to increase" and more deals were likely to be abandoned.
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.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
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