Fallout from protests puts commercial property negotiations on hold
The financial fallout from student-led pro-democracy protests had led to negotiations on the acquisition of several commercial properties being put on hold because it has put a damper on buying interest, property agents say.
Daniel Wong Hon-shing, chief executive at commercial property agency Midland IC&I said negotiations on five properties had stalled due to the difficulty of assessing the impact of the protests on the Hong Kong economy.
“Each of the deals pending involves about HK$20 million to HK$30 million,” he said. “Investors prefer to hold back their investment in the wake of rising political tension in the city. They will not make a hasty decision at this moment.”
He said negotiations had been halted temporarily deals involving three office properties – in Kowloon Bay, Kwun Tong and Tsim Sha Tsui – a shop in Western District and an industrial unit in Kwai Chung.
Although most were not in areas affected by the protests, Wong said investors were concerned that Hong Kong’s economic outlook could be damaged severely if the Occupy Central campaign lasted for a long time.
Wong said some landlords had lowered their asking prices by 10 per cent to 15 per cent but had still failed to entice buying interest.
The owner of a 400 sq ft shop in Cheung Wong Road, Mong Kok, had reduced the asking price from HK$5.8 million to HK$4.8 million after thousands of demonstrators took to the streets in pro-democracy Occupy Central protests that started on September 28.
In Central, a 2,150 sq ft shop in Wellington Street was being offered for HK$150 million, down from HK$180 million, agents said.
Meanwhile, the asking rent for a 400 sq ft shop in Johnston Road, Wan Chai, had been reduced by 17 per cent to HK$50,000 a month last week, a property agent said.
Some retailers were forced to shut their doors when protesters blocked roads, with sales during the National Day “golden week” holiday – typically one of retail sector’s busiest weeks – down substantially on the same period last year.
On October 1, the China National Tourism Administration suspended visits by tour groups to Hong Kong, threatening to further aggravate a retail slump sparked by Beijing’s clampdown on corruption and extravagant spending.
Wong said he expected retail rents would continue to fall in coming months given that retail sales were likely to trend lower.
“But it is really difficult to project the market’s prospects as it is very much hinging on how the pro-democracy movement ends and how long it lasts,” he said.
Wong Wai-kei, a director at Centaline’s retail shop department, said about 10 negotiations for the sale of shops were being held up because investors were concerned that prices could drop further.
“The next 15 days of development of the protest may give us a key indication of where the market will be headed to,” he said.