Amid slowing retail sales, Emperor International Holdings (0163.HK), which holds a portfolio of street-level shops, is prepared to slash rentals to retain or attract tenants.
Emperor focuses on premium retail space in popular shopping districts like Causeway Bay and Tsim Sha Tsui.
A drugstore-tenant in one of Emperor’s Causeway Bay properties terminated its lease three months ahead of the expiry date. After cutting the rentals by 30 percent, Emperor was able to attract a fashion brand to rent the space, Wen Wei Po reports.
The rental rate of that shop has already dropped back to its level two years ago. As other leases gradually mature, Emperor will most likely offer more attractive terms to retain existing tenants or draw new ones, the newspaper quoted the company’s executive director Cheung Ping-keung as saying.
Rental rates for shops leased three years ago may have to be adjusted downward by 30 to 40 percent, while contracts signed two years ago may need to come down by 50 percent, Cheung said.
But it’s not all bad news for long-term property investors like Emperor. The company is on the lookout for good acquisition opportunities to take advantage of the weak market and softer retail property prices.
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