YUE Hwa Chinese Products Emporium plans to open its fifth store next month in Causeway Bay, despite a lacklustre retail market and a depressed property sector. The company will lease 18,000 square feet of floor space on the ground floor and basement level in Pearl City for three years. Yue Hwa chairman and managing director Yu Kwok-chun said the company would be interested in acquiring the property, but the owners, including New World Development, were not ready to sell. 'Leasing is not a long-term solution. Previously, we have leased retail space, but it is hard to forecast how much the rents will go up,' he said. Mr Yu said he did not think in terms of returns from property investments, because the company's properties were all for self-use. 'If everyone looked at returns all the time, then there would be no retailers.' But as a retailer, he said, investing in retail properties offered long-term benefits. As an example, he cited the company's Jordan store, at the junction of Nathan Road and Jordan Road. The 100,000 sq ft retail and office development was bought in 1974. Mr Yu said Hong Kong's property prices soared too quickly last year, pushing up retail prices. 'This is no good for Hong Kong. We now face a high-cost situation, where prices are no longer reasonable.' He welcomed the downturn in the property and retail markets, describing the change as a 'long overdue', adding that the market had to readjust for healthier growth. Lower property prices provided the company with opportunities for investing in prime retail space at 'reasonable prices', he said. 'This is a feasible time to expand. When business was good in general, our sales might not have been as good as the retailers targeting the high-end of the market. 'But now that the market is at a low point, those who used to go for expensive shops might find that our products offer value for money, simply because we sell practical stuff.' Depressed consumer spending sentiment had also driven many small retailers to close down, he said. Landlords were therefore compelled to look for bigger and longer-term tenants. According to Lawrence Heung Ping-chung, director of property consultants C Y Leung & Co, sale transactions with small retailers had dipped, while big chain stores were taking advantage of the sluggish market. But he said leasing activity had not decreased, though rents had softened. He estimated that leasing rates for a 1,000 sq ft shop started at $300 per sq ft in Causeway Bay and $200 per sq ft in Tsim Sha Tsui. Mr Heung said landlords were more receptive to the type of lease where they would take a base rent and a percentage of the tenant's retail earnings. Mr Yu declined to reveal the lease terms for Yue Hwa's Causeway Bay store. But he said the firm usually invested between $20 million and $30 million in each store. The company also owns 20,000 sq ft of retail space in the Park Lane shopping mall along Nathan Road, a retail and office building on Peking Road and more than 100,000 sq ft warehouse space in Kwai Chung. A retail boom might not occur for another three years, but the company would continue to invest in properties, Mr Yu said. 'It is a must if you are professional about being a retailer. If you don't, you will not have a base,' he added.