Hong Kong protests: short-term leases for street-level shops could become the norm if no end to unrest, Knight Frank says

By Martin Choi and Pearl Liu martin.choi@scmp.com / https://www.scmp.com/business/article/3031884/short-term-leases-street-level-shops-hong-kong-could-become-norm-if-there?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | October 10, 2019 9:48 AM SGT
Short-term leases for street-level shops in Hong Kong could go mainstream by year-end, with no resolution in sight to the city's worst political crisis in recent years, property consultancy Knight Frank has said.
"Landlords have had to adopt shorter-term leases because of such a dire situation. It is better than leaving shops vacant," said Helen Mak, senior director and head of retail services at Knight Frank. "We will see more such monthly agreements. Some landlords may even allow tenants to renew every month. This could become a mainstream format by the end of the year, as we see no solution emerging in the short term."
An increasing number of landlords with street-level shops in Hong Kong are offering rent cuts as well as short-term leases to retain tenants as retail sales and tourist arrivals fall sharply amid anti-government protests that are in their fourth month now.
Many such shops, shopping centres, restaurants and even MTR stations remained shut during the October 5-7 long weekend, as the protests intensified in response to a face mask ban introduced on Friday midnight.
Short-term leases first emerged around mid-July, when pressure was first felt by retailers, Mak said. Landlords commonly require that tenants of street-level shops sign two to three-year leases, with an option of renewal for another one or two years.
But business has been affected by the protests. It has dropped by half, Ms Chan, an employee at Jade House Jewellery in Causeway Bay, said. The popular shopping district, also the world's most expensive in terms of rent, has been hardest hit.
"The last few months have been really quiet. There's nothing much we can do. Before the social unrest we were more busy," she said. "The protests have been happening all over Hong Kong " where can we go to do business? It's been very miserable.
"When it gets scary, we close at around 3pm or 4pm. Sometimes, we don't even open. Many of the shopping malls nearby have also shut their doors. There's nothing we can do."
Retail sales in the city dropped 23 per cent year on year to...