More Hong Kong restaurants and shop tenants are looking to surrender spaces for ‘free’, as coronavirus and government response bite

Restaurant operators and shop tenants across Hong Kong are looking to give up their spaces in greater numbers amid an economic downturn that started with the city’s anti-government protests last year and has worsened during the Covid-19 outbreak.

The number of shops and restaurants seeking replacement tenants to take over their current leases totalled 140 as of Tuesday at one agency – Midland IC&I – alone, representing an increase of 7.7 per cent over August last year, just after the protests took a turn for the worst.

Restaurant operators “would rather offer them for free because they still have to pay rent” even though they have suspended operations to reduce losses, said Edwin Lee, founder of Bridgeway Prime Shop Fund Management. The operators might need to compensate landlords, or risk being sued if they do not pay rent, which is why they are not charging any fee from tenants who might replace them.

“Very often, since the rent is relatively high, people do not want to take them,” he said, adding that dine-in and high-end restaurants had seen the biggest declines in sales.

About 100 such restaurants were up for grabs last year, but the number could rise to as much as 800 by the end of 2020, said Raymond Ng, marketing manager at Build-U-Biz, an online business selling platform that is currently hosting about a dozen such listings. “[The restaurant operators] simply do not want to pay rent. If they can find a replacement tenant [at current rent rates], they will offer these spaces cheaply,” said Ng. Before the protests started, the platform did not have any such listings.

The coronavirus pandemic has worsened the situation. “During the protests, some restaurants could still be open. Now, most must close day and night,” Ng added.