(By Liang Yueqin)
After half a year of the impact from amendment crisis since the second half of last year, the tourists to Hong Kong have significantly decreased, and less local people consume in the core shopping area, making the retail industry to be the first to be affected. Causeway Bay is a "hardest-hit area." Hysan (0014), a landlord in Causeway Bay, announced its last year 's results last month and pointed out that Hong Kong's "social events" had caused the company's net profit to fall by 20% last year. Their tenants continue to face difficulty operating this year because of the COVID-19 epidemic. Hysan predicts the business volume of the tenants in January to fall by another 20%, so it decides to provide considerable rent reductions from February to March to help overcome the difficulties.
Hysan made 20% less last year.
Hysan's earnings fell by nearly 20% last year. The basic earnings rose slightly to HKD2.58 billion after deducting property revaluation. However, in the second half of the year alone, the performance was 14% lower than that in the first half of the year, which was mainly due to the hit by social demonstrations in Hong Kong.
Lee, Irene Yun Lien, the Chairman of Hysan, expressed at that time that the Group is facing one of the biggest challenges in recent decades, after the "social incident" last year and current COVID-19 epidemic. She said these factors have a high impact on the business, and even Larger than SARS in 2003, so the Group decided to provide substantial rental reductions from February to March. Ho Shu-Yan, the Chief Financial Officer of Hysan, initial estimates the turnover for the month to fall by 20% base on the merchant turnover results in January that collected one after another. Lee, Irene Yun Lien believes that the development of Retail, luxury, and other businesses in Hong Kong has been too fast from a macro perspective. She says it is reasonable for the appearance of consolidating business scale, but the "social event" last year and the current COVID-19 epidemic has accelerated the process.
Wharf's rent share sharply decreases.
Harbour City Shopping Centre in Tsim Sha Tsui and Times Square in Causeway Bay are no exception. The Wharf Limited (1997) recently announced last year's results, pointing out the sharp decreases in revenue share rent in the third quarter and fourth quarter by 49% and 78%, respectively. Harbour City's rental income in the fourth quarter fell by 12%, and its retail merchant sales in the whole year declined by 23%. Tenant sales at Harbour City Mall and Times Square in Causeway Bay both fell throughout the year, and the decline was even more pronounced in the second half-year. Affected by social events in the second half of last year alone, the tenants' sales of Harbour City Mall decreased from HKD18.7 billion in the same period in 2018 to approximately HKD10.22 billion, a decrease of 45%; and the selling of tenants in Times Square also fell 34% in the second half-year. The annual occupancy rate of the two malls has stabilized at 97%.
Ng Hoi-Tin, the Chairman of The Wharf Limited, expressed on the same day that the outbreak of COVID-19 would be the global focus of this and next quarter, and the retail and hotel industries are expected to be affected. He said the business of their malls and hotels in January fell further.
The sales of Swire Properties' shopping malls fell across the board.
Besides, Queensway and Taikoo Shing once have become areas mostly affected by the violent confrontation. According to data released by Swire Properties (1972), the retail sales of its three retail properties in Hong Kong had fallen only by 4.2% in the first half of last year, because of the effect from the decoration of tenants in Pacific Place Shopping Mall, Queensway. While there was a slight 0.1% increase for retail sales in City Plaza Shopping Centre and Citygate Outlets. However, in the second half of last year, all the retail sales of its three retail properties in Hong Kong all fell, and the decline in the fourth quarter further expanded compared with that in the third quarter. In the second half of the year, Pacific Place Shopping Mall, City Plaza Shopping Centre, and Citygate Outlets fell by 12.6%, 3%, and 4.6% respectively from the first half-year. The annual retail sales fell by 11.8%, 0.8%, and 3.1% year-on-year, respectively.
Swire Properties said that the retail sales in various shopping malls fell last year. The main reasons are the decline in Hong Kong visitors and weak overall consumer sentiment. They will introduce measures to optimize the tenants' mix.
