Major mall owners in Hong Kong stand to lose as much as 30 per cent of sales in the coming months as shopping centres in areas hit by Covid-19 cases suffer from dwindling traffic amid lockdowns and tighter social distancing curbs. Analysts said losses could spread industry-wide, beyond the existing affected areas in Kowloon and New Territories, as health experts predict the current fifth wave of outbreak in the city could result in as many as 28,000 daily cases and higher death toll by June. The city logged a record 1,325 cases on Friday, having multiplied from fewer than 30 at the start of the year, with Kwai Chung, Sham Shui Po, Sha Tin, Tai Po and Tuen Mun among the worst-hit locations. The government last week unveiled the most stringent measures yet to contain infections caused by the Delta and Omicron variants. “I would expect an overall 20 to 30 per cent fall in retail sales during the current outbreak, (barring) any potential consumption coupon or fiscal stimulus from the government,” said Martin Wong, a director and head of research and consultancy for Greater China at Knight Frank. “As these cases are on the rise and spreading across the city, eventually the impact to different areas would be similar.” The resurgence will dampen sentiment and derail a recovery in consumer spending. Retail sales in Hong Kong climbed for an 11th month in December, according to government statistics, with sales rising 8.1 per cent to HK$353 billion (US$45.2 billion) in 2021 or just under HK$30 billion a month on average. The surge in daily infections has forced the government to cap public gatherings to two people, ban private gatherings of more than two families, and close more public venues such as houses of worship and salons. Shopping centres and supermarkets will only serve vaccinated customers from February 24. Before these stricter rules, neighbourhood malls in affected areas where the government imposed multiple lockdowns likely have lost a sizeable chunk of their customers as residents were prevented from leaving their homes. Hong Kong malls are likely to lose between 10 and 15 per cent in sales during this latest wave of outbreak, according to Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong. In particular, Metro Plaza, New Town Plaza, Yoho Mall, Tuen Mun Town Plaza, and Dragon Centre in the affected locations are likely to suffer more during the lockdowns, she added. Link Reit, Asia’s largest listed property trust, has disinfected 50 of the 98 malls in its portfolio after confirmed Covid-19 cases since late December while keeping them open for business. It does not have any mall in Kwai Chung, while 11 malls in Sha Tin and Tai Po have undergone disinfecting since December 29. “The tightening of social distancing measures would undoubtedly impact footfall and sales at our shopping malls,” a company spokesman said. Before the latest outbreaks, car park ticket sales in Link Reit malls had rebounded to pre-pandemic levels, suggesting healthy foot traffic. If various social distancing measures such as evening dine-in ban are in force, the footfall in supermarkets and fresh markets would rise, he added, citing its experience of the past two years. Not all malls had the luxury of keeping their operations undisrupted during the current fifth wave. The Sogo department store in Causeway Bay had to shut for two days last week after two of its employees tested positive for Covid-19, ruining lucrative weekend sales. “People are more cautious to practice social distancing and prefer staying at home for safety concerns,” said Lawrence Wan, senior director, advisory and transaction services for retail at CBRE Hong Kong. “Footfall in these [affected] shopping areas noticeably decreased over the Lunar New Year holiday.” The setback may be temporary and recent green shoots in the retail sector are expected to strengthen in the second half of 2022 when the infections are contained, according to Cynthia Ng, executive director for retail services at Colliers Hong Kong. “Malls are reacting diligently to adhere to the existing tightening of social distancing measures and the new vaccination policy,” she said. “The sentiment was quite strong in the second half last year, so it will come back [stronger] in the second half after Omicron is put under control.”