Hong Kong’s private commercial landlords join big guns in offering rent relief to tenants hit by fifth wave closures

Name: Why has Hong Kong been hit so hard by the Covid-19 fifth wave?
Uploaded: 2022-03-15T00:30:20.000Z
Duration: 7 min 29 s
Description: Why has Hong Kong been hit so hard by the Covid-19 fifth wave?

Tai Hung Fai Enterprise says it will help its tenants, who are its ‘bread and butter’

All tenants except one since 2019 ‘are still with us’, says Causeway Bay landlord H Development Holdings

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A deserted mall in Hong Kong’s Tsim Sha Tsui shopping district. Privately owned Tai Hung Fai’s offer of rent relief comes after MTR Corporation said last month that it would offer concessions across the 97 subway stations and 13 shopping centres it owns. Photo: Yik Yeung-man

Sandy Li

Published: 8:30am, 15 Mar 2022Updated: 8:32am, 15 Mar 2022

Hong Kong’s private commercial landlords are joining the city’s big guns in offering rent relief to their tenants.

Tai Hung Fai Enterprise, a property developer that has more than 1,000 tenancy agreements all over Hong Kong, including offices, serviced flats, warehouses and about 200 shops, said it would help its tenants, who are its “bread and butter”.

“We will work out a solution with tenants on a case-by-case basis,” said Edwin Leong Siu-hung, the developer’s founder. Instead of purely cutting rents, he said a temporarily lower base rent and higher turnover rent, such as 30 per cent to 35 per cent of sales, would be a solution that is fair to both landlords and tenants. Base rents are fixed, but turnover rents are based on sales revenue.

Hong Kong’s fifth wave of the Covid-19 pandemic has plunged the city into an unprecedented crisis, and Tai Hung Fai’s offer of rent relief comes after MTR Corporation – the city’s sole transit operator and owner of significant commercial property – said last month that it would offer concessions across the 97 subway stations and 13 shopping centres it owns. Link Reit, which operates 11 million sq ft of retail space in the city, said it too would offer “support on a case-by-case basis” across its properties. Developers Swire Properties and Hongkong Land said they would fully waive rents for tenants subject to mandatory closures imposed by the government to stop the spread of Covid-19 in the city.

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Why has Hong Kong been hit so hard by the Covid-19 fifth wave?

“Most tenants have accepted the turnover rent arrangement, as they can afford to pay more when sales rebound – and less during a decline in sales,” said Leong, who, with an estimated net worth of US$4.4 billion, is Hong Kong’s 22nd richest man this year, according to Forbes.

Tai Hung Fai’s tenants include restaurants, gyms, private tutoring schools and fashion retailers. The concessions it will offer will depend on the impact of Covid-19 on individual tenants’ sales, Leong said. “During this difficult period, landlords and tenants have to join hands to overcome this crisis, which may yet last for several months,” he added.