Hong Kong’s commercial and industrial property transaction volumes fell to the lowest level last year since record-keeping started in 1996, sinking nearly 50 per cent year on year, as investor sentiment took a beating since the anti-government protests started last June. Transaction volumes of industrial units, offices and shops plummeted to 4,636, from 9,217 in 2018, while turnover tumbled 35 per cent to HK$103.8 billion (US$13.3 billion), from HK$160.3 billion the previous year, according to data from property agency Ricacorp on Monday. The previous all-time low for volumes was 4,999 in 1999. “On average, some retail chains have said they would scale down a fifth of their stores,” said Dennis Cheng, senior sales director at Ricacorp. “This is only a [temporary] strategy. As consumption activity gradually picks up at the same time as shop rents drop, businesses would adjust to this.” Roy Wong, another Ricacorp director, said that although Hong Kong’s economy was still reeling from the aftermath of the protests, the market can bounce back this year as the social unrest gradually eases and businesses regain confidence after the signing of the US-China trade deal. Ricacorp expects office, industrial and retail property transaction volumes could hit 7,000 this year valued at HK$131 billion. Hong Kong luxury retailers seek more rent relief as protests cut sales in deserted malls “In the long-term, growth in the Hong Kong property market is still positive,” Wong said. “Purchasing power has accumulated as business sentiment weakened over the second half of 2019. The willingness to purchase was just delayed, it did not disappear.” Meanwhile, Centaline Property Agency expects transaction volumes to be muted this year – about 5,000 deals with a total value of HK$120 billion. “As Hong Kong’s economy slows down and overall investment climate remains reserved, transactions across commercial and retail would be subdued,” said Wong Leung-sing, senior associate director of research at Centaline. Ricacorp’s data showed that stores in Tsuen Wan and Sham Shui Po were among the worst hit, with transactions dropping by 48 per cent and 47 per cent, respectively. Retail property activity doubled in Central, Hong Kong’s key financial district, to 20 deals from 10 the previous year. In 2019, the number of retail shop transactions slipped 32 per cent year on year to 1,098, but only saw a 2 per cent fall in value to HK$40.712 billion, buoyed by deals in Link Reit shopping centres and the newly built K11 Musea mall in Tsim Sha Tsui, according to Cheng. The retail industry made up 4.2 per cent of the city’s economy in 2018, before the ongoing political crisis erupted in June last year over the now-withdrawn extradition bill. Since Italian fashion house Prada decided not to renew its flagship store lease in Hong Kong , other businesses such as century-old French label Louis Vuitton and major jewellery chain Chow Tai Fook have also said that they were scaling back their presence in the city. Cheng remains hopeful that tourist arrivals and consumption will pick up in 2020. He expects retail property transactions to climb 10 per cent to more than 1,200, totalling about HK$41 billion. At the same time, he expects shop rents in main shopping districts to fall in the first quarter before stabilising for the rest of the year . Landlords have either slashed rents or offering short term contracts to reduce store vacancies. In Haiphong Road in Tsim Sha Tsui, frequented by mainland Chinese shoppers, a store selling red packets for the Lunar New Year won a 1,050 square feet space for a three-month contract of HK$150,000 a month, a 70 per cent discount compared to its previous tenant, footwear company Crocs.