Leases stops because of no tourists and no prosperity.
"The business is closed due to the severe epidemic." There is one drugstore in Haiphong Road, Tsim Sha Tsui, just closed. Many white flags hung in front of the door, beside which was written a big word "tragic." This place that was crowded because of free travel in the past looks like a mourning hall. Even SaSa, the most beloved of the mainland customers, has to end the business of its 7,000 sq ft branch in Peking Road. Yesterday, there were no tourists on the streets around Peking Road, Haiphong Road, and Hankow Road. Office workers were also few. There were nearly 5 street shops among 40 in Peking Road closed. Under the COVID-19 epidemic, restaurants, bars, drugstores, watch and jewelry, fitness studios, and even 40-year-old restaurants have closed. The Victoria Harbour is deserted, no dazzled neon lights like in the past.
Journalist (Lai ChiTin)
Tsim Sha Tsui, Hong Kong's first-tier retail core area, had been flourished. There are over one hundred shops on three streets, and nearly forty shops on a section of Peking Road in front of Langham Hotel, Tsim Sha Tsui. And five among have closed. Among about sixty shops on Hankow Road, about eight have closed. Haiphong Road, which has a relatively higher flow of people, temporarily has two shops closed. Most of them suspend the business due to the epidemic. The situation there is relatively good. However, many shops on the nearby non-primary streets, the ground floor, or the upstairs are vacant. Even the famous watch shops are empty. It may be a step away from the "Dead City."
The monthly rent for a two-story giant shop in 7,000 sq ft is HKD900,000.
Yesterday, it was reported that the 7,000 sq ft two-story branch of SaSa, a chain of cosmetics brand, in Mary Building, Peking Road, Tsim Sha Tsui, is about to close. It can save nearly HKD10 million a year after closing if the monthly rent of the store is about HKD900,000. SaSa responds that the Peking Road branch will close because of the end of the lease, and the business in Tsim Sha Tsui has sharply dropped by 90% due to the quickly decreased number of tourists visiting Hong Kong. According to market sources, the owner currently cuts the rent by 32% to monthly HKD610,000, with the monthly sq ft rent only at HKD87, and the shop will be vacant in this June.
The business of Loon Chun suspends, decreasing to only 10%.
The business of restaurants and retail drugstores depends on people. Now many countries around the world have locked down due to the COVID-19 epidemic. Hong Kong has also issued travel warnings of nearly all the world. The business is difficult because of no tourists. The only thing that can do is to suspend or close the business. The reporter saw yesterday that Loon Chun Food, not far from the SaSa's Peking Road branch, also suspended the business.
The boss of Loon Chun Food, Chen Hok-Wai, told a reporter that the business was temporarily suspended and the shop owner is willing to cut the rent in half. But the shop is located in the core area, and the business has fallen to only 10%. Besides, there is a loss, calculating the rent, water and electricity fee, salary, and rates. The boss has branches in Carnarvon Road, Peking Road, and Haiphong Road of Tsim Sha Tsui, and currently determines to close the one in Carnarvon Road, while is considering whether to abandon the lease for the other two.
Chui Wah restaurant, a shop must go during free travel, is reported to close its branch in Hong Kong Central District. The company states that its closure is related to the reduction of outdoor meals by the public, and it has to suspend the business to control costs effectively. The data shows that Chui Wah rented this shop in Wellington street from the end of September 1998. In 2014, Hip Shing Hong relented it to Chui Wah after cutting the rent from HKD2.3 million by HKD1 million or 43% to HKD1.3 million.
The hit to the whole industry is also comprehensive as the epidemic continues to spread. Recently, a large fitness studio in other core districts, such as Wan Chai, closes. And an old and famous shop Se Wong Yee in Percival Street, Causeway Bay, also says goodbye. One more 40-year-old renowned shop, which had survived after SARS and the financial turmoil, disappear due to the COVID-19 epidemic.
Low Chin-Ho, the Director of the Midland Shops Department, said that the current shop market is deteriorating, and the COVID-19 epidemic has made most tenants reluctant to renew their leases. " All shop owners in Kowloon and New Territories also the whole Hong Kong want to keep the original tenants as much as possible, regardless of rent decrease by 60-70% to seek renewal or lease. Owners are currently in a disadvantaged position, who are very happy as long as they see customers, but unfortunately not now. "
Core area vacancy rate is expected to reach 17.5%.
The consumption is significantly reduced since citizens avoid going out of the street under the epidemic. Shop tenants are still a loss, even the shop owners willing to reduce rents. Low Chin-Ho estimates that shop tenants and owners have to endure "one and a half years" further until the vaccine is available. The company has increased the expected overall vacancy rate in four Hong Kong core areas in the third quarter of this year from 12.5% to 17.5%. He adds that there is little possibility that the overall vacancy rate in the four core areas will exceed 20% under the contract spirit unless there is panic rent abandonment.
