Whampoa retailers face rent surge and dip in visitor numbers after initial high from MTR launch

Smaller shops are edged out by big chains, while rents soaring by as much as 30 per cent negate increase in customer numbers

PUBLISHED : Wednesday, 23 November, 2016, 5:51pm
UPDATED : Wednesday, 23 November, 2016, 7:25pm

Retailers in Whampoa hoping for a business boom from the opening of new train services have been left disappointed as customer numbers fizzle out after an initial spike, but rents continue to soar.

Dragon Place Cafe, a Hong Kong-style restaurant near exit A of Whampoa MTR station, had its monthly rent raised by 30 per cent after rail services commenced, while its business increased by some 20 per cent, according to a shop manager, who says they are “still losing money”.

The manager adds that while there was a surge in people visiting the area when the train services opened, customer numbers have sagged.

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Not far from the cafe is a newspaper stall, which has experienced a business decline following the opening of the new station – because most construction workers at the site, who were regular patrons, have left.

The stall owner, a lady in her 50s, says not many commuters stopped to buy stuff from her despite the high visitor traffic.

“Business was much better” when the workers were around as they bought drinks and cigarettes daily. Construction of the rail line extension started in 2011.

News of the launch of the HK$7.2 billion Kwun Tong Line extension also triggered a reshuffle of retailers and eateries in the area in the last two years, with small shops facing competition from big players.

“Many small shops [in malls] were replaced by big chains,” says Sherman Chu, owner of a menswear store at mall Wonderful Worlds of Whampoa.

Chu started his business in 1996. He recalls that the mall was occupied mostly by small outlets.

But a two-storey shop by Japanese lifestyle chain Uniqlo opened last year next to his outlet. Opposite, a H&M store, one of the world’s largest fashion retailers, beckons.

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Chu says he has lost some regular customers in the first few weeks after the launch of the rail extension, because residents could now travel easily to other parts of the city to shop.

New visitors to the area either frequent the big chains or are unfamiliar with his products, Chu adds.

Amid the retail woes, rental costs have also soared in the last two years. This prompted Chu to relocate his 18-year-old shop to a space that is 25 per cent smaller, as rents rose by 30 per cent.

The business boom may have fallen short of the hopes of retailers, but the “MTR effect” is good news for landlords and homeowners.

Mike Ng, a real estate agent at Centaline Property’s Whampoa branch, says prices of homes have increased by about 5 to 8 per cent, while rents for homes have surged by 10 per cent since the rail extension launched.