Retail leasing slows after lacklustre 'golden week'
Disneyland's failure to attract the high number of visitors that were expected during the week-long holiday season marking National Day is expected to subdue the retail leasing market over the next three months, industry experts say.
This year's 'golden week', the first since the opening of Disneyland Hong Kong, resulted in less than satisfactory retail sales growth, and property consultants expected retail leasing to remain cool in the fourth quarter.
Pierre Wong Tsz-wa, chief executive of Midland Realty's commercial and industrial division, said the volume of retail leasing transactions had dropped 20 per cent in the three months to last month, compared with the previous quarter. 'The reverse trend is uncommon,' he said.
Retailers usually opened new stores in the third and fourth quarters to take advantage of the shopping activity ahead of the Christmas and Lunar New Year festive seasons. 'Traditionally, the last two quarters are our busiest,' Mr Wong said.
Kwan Pak-hoo, chairman of the Hong Kong Retail Management Association, expected the week-long National Day shopping spree by mainland visitors to generate just single-digit growth, compared with last year's golden week.
Meanwhile, this week is being described as a 'super golden week', with yesterday's Chung Yeung festival holiday extending the weekend for many.
Since September 30, more than 367,000 mainland visitors have entered Hong Kong, up by about 10 per cent on visitor figures for the same period of last year. Some tourist agencies had expected as many as 700,000 visitors.
Last year, 429,000 mainlanders came to Hong Kong during the 10 days of the Mid-Autumn Festival and the National Day 'golden week', exceeding forecasts. About 287,000 came to Hong Kong in the same period in 2003.
Dong Tao, chief regional economist at Credit Suisse First Boston (CSFB), said the market had exaggerated the Disneyland effect on Hong Kong.
'All we have heard in the past month was Disney, Disney and Disney,' he said. Speculation associated with Disneyland had been greatly exaggerated, he added.
'Disneyland is a nice addition to the Hong Kong tourism sector, but if you are counting on it to cause a rally in the property market or the stock market, you'll be disappointed,' Mr Tao said.
Mr Wong of Midland Realty said retailers would be more cautious after noting that sales growth and visitor numbers had fallen short of expectations.
'They will take a wait-and-see attitude,' he said.
Wong Wai-kei, sales director at Centaline Property Agency's commercial, industrial and shop department, said some landlords on the fringe area of Causeway Bay had lowered their asking rents by 10 per cent. But shop rents at prime locations remained unchanged, he said.
'Retailers may defer the opening of new stores to next year in the face of expensive rents,' he said.
Mr Wong expected retail rents to taper off in the fourth quarter because retailers would not be prepared to pay aggressive rents any more.
Average rents had risen 15 per cent to 20 per cent so far this year. There was a 60 per cent increase for the whole of last year, he said.
