Causeway Bay’s retail vacancy rate to soar, with one in 10 shops standing empty as Hong Kong’s street rallies enter their 15th week
- As many as 102 shops stood empty out of 1,087 in August in the district, or a vacancy rate of 9.4 per cent, according to data by the real estate agency Midland IC&I
- More than 600 shops may empty out by next year, according to forecast, putting hundreds of staff out of work
One in every 10 shops in Causeway Bay now stands empty, as three months of protest rallies have deterred visitors from the world’s most expensive shopping district, adding to the woes of a retail industry that is already suffering from a weakening yuan and mainland China’s abolition of luxury tax.
As many as 102 shops stood empty out of 1,087 in August in the district, or a vacancy rate of 9.4 per cent, according to data by the real estate agency Midland IC&I, which noted that the tenant-free rate may rise to 11 per cent next year, as “sentiment is worsening quickly” in the city.
“The prospect is quite critical. In my many years of dealing [with] shops, this is even worse than the Sars [outbreak] because the scale of the retail industry was not as large” during the 2003 outbreak of the severe acute respiratory syndrome, said Midland IC&I’s director Tony Lo.
“There will be more than 600 vacant shops in four core districts next year,” which would be a 38 per cent jump from August if the vacancy rate surpasses 2017’s record of 664, said Lo, attributing the slump to a combination of the “political conflicts that have persisted” with the year-long US-China trade war, depreciation of the yuan that dampened mainland visitors’ desire to spend and difficulty to hire workers under high salary cost.
“The [number of] businesses that want to lease have fallen and many have suspended their opening plans because they are unsure how long the political incident will last,” he said. “Withdrawals from committed leasing is showing signs of worsening.”
Hong Kong’s retail sales fell 6.7 per cent in June, the fifth consecutive month of declines as protest rallies picked up pace.
Chow Tai Fook Jewellery Group, one of the city’s largest and oldest retailers of gold and gemstones, said it would review the profitability of its stores while “actively looking for cuts on rental renewals, aiming to strengthen financial position and efficiently use resources,” according to a spokesman, citing “cautious consumer sentiment amid the current market uncertainties.” The jeweller operates eight stores in Causeway Bay, four of which are in shopping centres while four are street-front stores.
A bar owner along Gloucester Road on the waterfront, whose watering hole had just opened in June, said she had to close her business every weekend because of the ongoing protest rallies which have included Causeway Bay as a key battlefield.
Declining to give her name or her bars name, she said she had to lay off all three of her full-time staff on August 1, leaving only one part-time employee. She said she is struggling to pay the rent, because patrons have stopped coming for fear of being caught in the rallies, which have deteriorated into clashes between police and protesters.
Retail rents in core districts may decline by between 10 and 15 per cent in the second half of 2019, and may deepen further to 30 per cent by the end of next year if the situation persists, Midland IC&I said.
