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SCMP Reporter

Chain decides to shut shop after failing to find suitable alternative premises

The city's largest music chain store, HMV, has become the latest victim of the tide of shop rental increases.

It will close its store at Sha Tin New Town Plaza, which it has operated since August 1996, on April 21.

Its closure will come four days after that of the 29-year-old Ocean Palace Restaurant and Nightclub. The Tsim Sha Tsui restaurant closes for good on Sunday because it cannot meet the rent increase set by landlord Wharf Realty.

HMV parted company with its landlord, Sun Hung Kai Properties, without even negotiating on the new rent for its slot in the mall, which is to be revamped.

The chief executive of Midland Realty's commercial and industrial division, Pierre Wong Tsz-wa, said it was normal for landlords to redecorate rental units and raise rents in good economic times.

'Even without explicit talks, both the landlord and tenants understood mutually that the new rental price would be higher. There is no doubt about it,' he said.

Centaline executive director Louis Chan Wing-kit said the present round of rent increases reflected reality.

'Landlords will not be so stupid to kill a goose that lays golden eggs,' he said. 'The rental was very low in past years due to the economic downturn, especially during the Sars period.'

He said landlords had kept tenants through the crisis by slashing rents, which in 2003-04 were 30 per cent less than in 2002. 'So, the recent rental increase of 30 per cent is very reasonable,' Mr Chan said.

Mr Wong said rents would go up another 10 to 15 per cent this year.

An HMV spokesman said yesterday the company had been through a year-long negotiation with Sun Hung Kai Properties on alternative sites.

'We have been offered a few alternative locations at the mall but none of them was suitable,' she said, adding that the 25 staff at the branch would be redeployed to HMV's shops in Causeway Bay, Central and Tsim Sha Tsui.

Sun Hung Kai Properties said the closure had nothing to do with the rent. 'HMV decided not to renew the lease before we discussed the rent,' a spokeswoman said.

She said the fourth floor of New Town Plaza, where HMV was located, would be renovated and dedicated to fashion outlets.

'We asked HMV to move their store to another floor but they couldn't find a location they preferred,'  the spokeswoman said.

The owner of Ocean Palace Restaurant and Nightclub said yesterday he had offered a 30 per cent rent increase to stay at the Tsim Sha Tsui mall, but was turned down.

Wharf managing director Doreen Lee Yuk-fong said: 'It wasn't a question of rent. We wanted to change the operation mode. We want to divide the [40,000 sq ft] space into three to four smaller restaurants to create variety. Our customers' demands have changed so we must accommodate them.'



HMV store to close as rents claim next victim