A slump in Hong Kong retail sales may be cutting income for store owners but it’s also giving them some bargaining power with landlords to cut rents, Apple Daily reported Friday.
Byron Yiu, founder and chief executive of designer bag retailer Milan Station (01150.HK), said the company will not extend store leases unless rent is cut.
Yiu said Milan Station refused to agree to one landlord’s rent hike of 120 percent last year and expects rents in Mong Kok to fall next year.
More stores are available for lease now in the city’s major shopping districts after retail spending plunged 9.8 percent year on year in April, marking the biggest monthly fall since 2003 when the mainland solo visitor scheme was first introduced. The fall in spending reflects, in part, changes in shopping behavior among mainland tourists.
Some landlords are sensing a change in the wind and are starting to cut rents.
Peter Leung, managing director of watch retailer Halewinner Watches Group, was quoted as saying he has never seen so many stores available on Percival Street, a major thoroughfare in Causeway Bay, since he went into the business 30 years ago.
Leung said the group negotiated a 20-plus percent cut in rent during lease renewal talks.
Wong Wai-sheung, chairman of jewelry retailer Luk Fook Holdings (International) Ltd. (00590.HK), said the company has changed its store lease strategy and does not plan to set up outlets in core districts because the rents are too high. The company previously terminated a lease on a store in Tsim Sha Tsui’s Nathan Road.
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