Landlords forced to lower asking rents as mainland tourist spending falls
Decline in number of big-spending mainland tourists has hit sales of luxury goods, forcing owners to be more realistic in their rent demands
Property investors who bulked up their retail portfolios in recent years have found themselves on the wrong end of a bet on mainland shoppers driving a sustained boom in sales.
With retail sales falling in Hong Kong, as mainland visitors tighten the purse strings, owners of shops in core districts are cutting asking rents by up to 40 per cent.
Investors had been willing to pay a premium to snap up shops in major shopping areas - such as Causeway Bay and Tsim Sha Tsui - on expectations that rental yields would rise from as low as 1 per cent to up to 4 per cent when the old leases expired.
The changing habits of mainland tourists put paid to such hopes; now, these landlords are adjusting to a more sober outlook.
International luxury brands ... are no longer expanding aggressively
"Retail investors began to cut the asking rents of their shops by 16 to 40 per cent in early June," said Kenneth Yau, senior district sales director at agency Centaline Property.
According to agents, a two-storey property at 468 Jaffe Road in Causeway Bay had been left vacant for two years as the landlord held out for a monthly rent of HK$1.35 million. Last month, the owner accepted less than HK$1 million a month from a fitness centre operator.