Ripples from falls in Hong Kong’s retail sales are being felt in the city’s leasing market, with an increasing number of tenants bringing their contracts to an early end and more landlords cutting rents, Ming Pao Daily reported Thursday.
Watch retailer Swatch will terminate its lease on a prime street shop in Mong Kok, which had cost it around HK$1.54 million in rent per month. The business will relocated to a mid-market shop at a neighboring site for HK$450,000 a month.
Landlords have also started to cut rentals to attract retailers. One shop in Mong Kok that was available for HK$1.2 million per month in March is now going for a third less at around HK$800,000. The owner of another prime site in Granville Road, Tsim Sha Tsui, is till vacant despite an 8 percent drop in rent to HK$230,000.
Retail spending in Hong Kong plunged 9.8 percent year on year in April, marking the biggest monthly fall since 2003 when the solo visitor scheme was first introduced, excluding seasonal factors, it said. Sales of jewelry and super-luxury watches were hit hardest, with a year-on-year decline of nearly 40 percent.
Falling sales and rising rents and headcounts have cut into the retail bottom line. One industry insider was quoted as saying that the situation is expected to worsen if the Hong Kong government restricts the number of solo mainland visitors to the city. If so, rent cuts are expected seep out into New Territories districts like Yuen Long and Tuen Mun.
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