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Hong Kong property

Tenants of small shops fear ‘inevitable’ rent rises that will force them out after Link Reit’s HK$23 billion mall sale

Residents in nearby public housing estates concerned they will have fewer choices at more expensive chains

PUBLISHED : Thursday, 30 November, 2017, 7:34am
UPDATED : Thursday, 30 November, 2017, 9:00am

Tenants of small shops are fearing inevitable rent increases that will force them to close after the largest real estate investment trust in Asia announced the sale of 17 Hong Kong shopping malls on Tuesday.

Residents in nearby public housing estates are also worried these mom-and-pop stores will move away or close down, leaving them fewer choices at more expensive chains.

Their concerns were triggered by Link Reit’s biggest ever deal that would see it sell 17 malls for HK$23 billion (US$2.95 billion) to a consortium led by Hong Kong-based private equity fund Gaw Capital Partners. US-based investment bank Goldman Sachs is part of the consortium.

Bobo Wong Wai-mui, 50, runs a shoe shop in Hands mall in Tuen Mun.

“They are selling again?” Wong, who had not heard about the news until informed by the Post on Wednesday, said incredulously.

The mall is the go-to place for residents in the surrounding Yau Oi and On Ting estates.

Wong said the shop was opened by her parents in 1982, but had shrunk from 2,000 sq ft to about 500 sq ft due to continuous rent rises after the Link took over government malls and markets in 2004.

“We are the few lucky ones who have managed to stay,” she said. “We’ve seen many of our old neighbours disappear. It is really quite sad.”

Wong said many old tenants left in 2014, after the Link spent HK$480 million (US$61.5 million) renovating the mall.

She added that her rent increased by 30 per cent after the renovation and she now had to use half of her monthly revenues to pay it.

“I’m really worried about another rise,” she said. “Every increase is like cutting away a piece of me.”

May Wu Mei-yee, a 51-year-old housewife who has been living on On Ting estate for 26 years, said she was worried the new owners might target mainland Chinese tourists and encourage them to visit the mall.

“All the food and groceries have become more and more expensive,” she said. “We will really have nowhere to go if they raise prices again. If they start to target mainland tourists, the mall will not be selling what we locals want.”

About 70 per cent of the shops in the mall are occupied by chains.

In Shek Lei Shopping Centre in Kwai Chung, about half the tenants are small shops and the anxiety was more palpable here.

Betty Chen, who runs a comic book store in the old shopping centre, said it was her husband’s dream to open a comic book shop so they continued to stay in the mall even though they had to use almost all the income of the shop to pay rent.

Chen said her husband had a full-time job to sustain the family.

“I think rent increases are inevitable,” she said. “It’s useless to worry. Shops here have no other choices. We either stay and suffer, or close.”

The Link has already sold 28 of its shopping malls in public housing estates for HK$11.96 billion (US$1.53 billion) over the past three years. The trust still owns more than 120 malls in public housing estates in Hong Kong.