The escalation of social conflicts has caused a serious setback in the retail market
In the core business districts of Causeway Bay and Mong Kok, pharmacies and watch shops have closed before the expiration of the lease, which is rare in recent years. Some shoppers believe that the retail market is “removing” and it is expected that rents will fall by 50% to 70% in the next one to two years.
Originally rented by the watch shop, there are two plots of Lee Garden Road in Causeway Bay, covering an area of about 1,500 square feet
Jipu renting, that is, nearly 20%
The number of visitors to Hong Kong has decreased significantly in recent months, and the retail business in major shopping areas has been hit hard. According to the information, a section of Lee Garden Road in Causeway Bay is about 700 square feet. It is adjacent to the pedestrian area of Russell Street. The pharmacy has been chartered for two years since September last year. The lease is for September next year. The monthly rent is about $380,000. . However, the shop was closed at the end of the month, that is, the lease period was not completed for one year. The landlord is now re-leasing the rent at about $330,000. The rent is about 13% lower than before.
Two single-storey grounds in the same street, each with an area of about 750 square feet, totaling about 1,500 square feet. Originally, a watch shop was rented at a monthly rent of about $300,000. The lease was until April next year, but it was closed at the end of last month. The remaining seven months contract has not been completed. The owners re-let the two shops in the market for rent, with an intentional monthly rent of about 250,000 yuan, which is about 17% lower than the old one.
The table leaves eight months earlier
In addition, the city of Mong Kok, which is lined with gold, is also facing a severe market. According to the Land Registry, the single-storey ground floor of Nathan Road, Mong Kok, was rented by the local watch shop at $350,000 a month. The lease period was originally from May 2017 to May 2000. However, due to the recent social turmoil, the shop was closed early in the beginning of last month and the lease period has not been fulfilled for eight months. The shop has an area of about 2,200 square feet. It is currently rented at about $300,000 a month and it is also about 14%.
In fact, the rent trend in Causeway Bay has been downward. According to DTZ, as of the third quarter, the average rent in the district was about 1,662 yuan, down 7% quarter-to-quarter. It is expected to fall by 11 to 13% for the whole year. As for the situation in Mong Kok, the average rent in the third quarter was $545, down by 3.6% quarter-to-quarter, and the whole year was expected to fall by 4 to 6%.
The demonstrations that lasted for several months made the merchants in the core area disheartened. Mr. Peng, the head of a pharmacy in Shandong Street, Mong Kok, said that there was a store opening for the 11th holiday, but there was no mainland patronage, and I believe that there are only a few thousand dollars in business, which is described as the worst day in recent years.
He also said that since July, the daily business of the shop has only remained 40%, which means that the business has fallen by as much as 50% to 60%. He also estimated that the pharmacies that have been actively opening stores in recent years will soon be “supported" and it is estimated that there will be many cases of completion in the future.
The largest business of franchising tourists
Investors also believe that paving the market or entering a long-term decline. Li Genxing, Chief Executive Officer of Shenghui Retails Fund Management, said that the overall market conditions are very poor, and the leasing market is even worse. Many owners need to ask tenants to stay low and continue to operate. They admit that “the tenants are willing to go well and be stubborn."
He also pointed out that the biggest impact at present is to open stores in the core area for tourist business. The stores mainly sell medium and high-end products, durable goods or dry goods retail types. He estimates that the retail business in the core shopping districts has a “depletion”. It is estimated that in the next one to two years, the rent will be reduced by 30% to 50%. If the shop is converted to short-term rent, the rent will fall by 70%.
Zheng Deming, senior business director of Lijiage (Industrial and Commercial), said that the owners are willing to reduce the rent by about 30% to 40%, and may not be able to receive new tenants immediately. Due to market conditions, pharmacies and high-end luxury goods are currently reducing the number of branches.