Hong Kong’s street shops in flux as pandemic upends businesses, creates new opportunities

April saw 186 shop transactions, an 18 per cent increase over March, stretching a rally of three months and marking a 56-month high

The worst has passed, as far as shops are concerned, market observer says

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Pedestrians walk past a shuttered store in Hong Kong. Photo: Bloomberg

Published: 9:30am, 2 Jun 2021Updated: 10:08am, 2 Jun 2021

Hong Kong’s street shop landscape has transformed dramatically following the outbreak of the coronavirus pandemic, reflecting the changing fortunes of investors and industries amid the unprecedented dislocation it has caused.

Some investors, including property industry heavyweights, are buying shops at low prices while others are selling them, partly because some businesses are struggling. According to the Land Registry, shop transactions rose for a third month in April, adding 18 per cent over March to 186, and marking a 56-month high.

“Many of those active before the coronavirus outbreak are [now] selling shops. Very often, those who sell shops are in industries affected [by the pandemic]”, said Edwin Lee, founder and chief executive of Bridgeway Prime Shop Fund Management.

The buying and selling of shops reflects the changing fortunes of industries, with banks, cosmetic chains, bakery chains and investors related to The Center acquisition selling shops since the coronavirus pandemic started, Lee said. For instance, banks were selling shops because of virtual banks – they do not need so many branches now, he said.

Many of those who are buying now are those who had stayed silent in the market for a long time and wanted to “buy low”, Lee said. There are also new investors who are exploring alternative property investments, or shops for their own use.

“The worst time for the shop market has passed,” Lee said, adding that the prospect of travel bubbles, consumption vouchers and the government’s plan to buy shops had led to a feeling of optimism. Transaction volumes will surge by one to 1.5 times this year from about 1,000 deals last year, Lee said. Shop prices in residential districts will appreciate by 20 per cent to 30 per cent, while those in core districts will rise 10 per cent to 15 per cent, he predicted.

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