Sales of retail shops suffer after duty rises
More defaults forecast for second half in the wake of extra tax burden and lending squeeze
The government's decision to double stamp duty on the purchases of commercial real estate and tighten lending has caused a slump in the number of retail property transactions.
Data released by Ricacorp (Commercial, Industrial and Retail) Properties shows the number of retail transactions plunged 85.6 per cent to 158 last month from a peak of 1,098 in February.
"The retail property sales market dropped sharply after the government's announcement of the doubling of stamp duty. The industry outlook remains grim as the market is unlikely to turn around overnight," said Percy Or, senior regional director of the retail department at Ricacorp (CIR) Properties.
The retail property sales market dropped sharply after the government's announcement of the doubling of stamp duty. The industry outlook remains grim as the market is unlikely to turn around overnight
The blow to sentiment was triggered mainly by the government's announcement on February 22 of a doubling of stamp duty on non-residential property sales exceeding HK$2 million.
The property agency forecast the number of retail transactions would fall further to 900 in the second half of this year from 2,778 in the first half, Or said. "It will be the lowest since the first half of 2009," he said.
Eddie Chan, assistant district director of the retail department at Ricacorp (CIR) Properties, expected more defaults in the second half of the year because of the extra tax burden and the fact that banks had lowered their valuations of commercial properties since the market turned poor.
Recently, a buyer forfeited HK$4.25 million after terminating a HK$42 million purchase of a 1,000-square-foot street-level shop in Wyndham Street in Central, he said.