Emperor International Holdings Ltd. (00163.HK) is bracing for significant cut in rents at some prime properties when the tenancy agreements come up for renewal.
The company warns that rents may even drop 30-50 percent at some properties as retailers are not too optimistic about their industry prospects, the Hong Kong Economic Journal reported.
Some tenants who signed up three years ago for first-tier commercial properties could seek rental cuts of as much as 30 to 40 percent when the contracts come up for renewal, the report said, citing executive director Donald Cheung Ping-keung.
Some transactions may even see the rents halved, according to Cheung.
However, tenants have not walked away from contract renewals, he said.
Emperor has seen only one tenant give up his store, an outlet on Lockhart Road, Cheung said. The company has found a new tenant for that property, but had to slash the rent by 30 percent.
Cheung said his firm is rolling out newly furnished and redeveloped premises to ensure the stability of its rental income.
It is now a good time to acquire quality retail space and adjust the company’s property portfolio, Cheung said, adding that Emperor may consider disposal of certain lower-tier assets.
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