Outlook for Hong Kong retail rents bleak as trade war and protests dampen sales

By Daryl Choodaryl.choo@scmp.com / https://www.scmp.com/business/article/3017762/outlook-hong-kong-retail-rents-bleak-trade-war-and-protests-dampen-sales?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | July 12, 2019 10:22 AM SGT
Hong Kong's retail leasing market is expected to slow further in the second half as sales continue to slump because of the US-China trade war and uncertainty over protests against the extradition bill, industry observers say.
Overall rent for shops along prime shopping streets fell 1.2 per cent quarter on quarter from April to June, with Central recording the sharpest drop at 3.8 per cent, real estate research and consultancy firm Savills said.
"In the first half of the year, business has been slow for retailers," said JLL's regional director of retail leasing services Jeanette Chan. "And now with the rally and protests against the extradition bill, business is even worse."
Landlords are already renting out shops at massive discounts. According to Savills, high-end US restaurant Lawry's The Prime Rib got an 80 per cent discount on a 6,500 sq ft space in Central compared to the previous tenant. Other tenants too have managed to wrangle hefty discounts from landlords.
Retail sales fell for the fourth straight month in May despite strong growth in tourist arrivals from mainland China during the national mini-Golden Week holiday, government data showed.
JLL predicted there would be a 5 to 10 per cent drop in high street rents and up to 5 per cent growth in shopping centre rents for the second half.
"It was so congested, people could not shop from Causeway Bay to Admiralty and even Central. Even if they could go and shop, they were scared of being stuck," Chan said.
Demonstrators have said that protests will continue until their demands for the government have been met, including the complete withdrawal of the bill.
"I don't know whether it's going to be a short- or long-term thing," said Chan. "[But] from the comments of retailers, it seems like business has been badly affected."
On Sunday,...