Shanghai lockdown: Hong Kong developers Kerry and Hang Lung looking at ways to support shopping centre tenants in China’s financial capital
- ‘Currently looking at the best way to support each of our tenants’: Kerry Properties
- Swire Properties says it will provide support to retail tenants at HKRI Taikoo Hui and Taikoo Li Qiantan on a case-by-case basis
“We recognise this is a very challenging time in Shanghai for everyone,” the home builder said in an email to the Post. “We are currently looking at the best way to support each of our tenants, which potentially include a number of initiatives from rent relief to other forms of assistance depending on their individual needs.”
The Shanghai government has told state-owned firms to offer free rent for three months, and encouraged private companies to extend relief to tenants too.
At the moment, Kerry said it is focused on ensuring the health and safety of its staff, tenants and partners. The two malls cover about a million sq ft between them and house tenants that range from Burberry and Lowe to Adidas and Nike.
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The Jing An Kerry Centre on Nanjing Road West normally attracts more than a million visitors per day. The other is Pudong Kerry Parkside, located across from Century Park and twinned with the Shanghai International Expo Centre.
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“We have been closely communicating with tenants on necessary arrangements. The current priority is to address their operational needs ensuring full cooperation with the government’s arrangement,” it said on Thursday.
Swire Properties said it would provide appropriate support to retail tenants at HKRI Taikoo Hui in Puxi and Taikoo Li Qiantan in Pudong on a case-by-case basis.
Shanghai’s lockdown sparks panic buying for food and essentials
Chinese financial hub Shanghai entered a two-stage lockdown and mass-testing period lasting eight days on Monday. Areas to the east of the Huangpu River – including the Pudong New Area where about 5.7 million people live – come out of their lockdown on Thursday night. The second stage starts on Friday, and will see Puxi, to the west of the Huangpu River, shut down for four days.
The Shanghai government has offered 140 billion yuan (US$22 billion) in tax incentives, cut a range of fees, and exempted certain companies from paying rent for three months, according to an online press briefing on Tuesday.
“It is still too early to tell. Rental concessions were offered by some Hong Kong landlords in 2020, in response to the initial lockdown,” said James Macdonald, a senior director and head of China Research at Savills, which has 44 buildings in its database developed by Hong Kong developers. These buildings have a total retail gross floor area of 3.4 million square metres, or 27 per cent of retail malls larger than 20,000 square metres within Shanghai’s outer ring road.
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There would be some financial support, but it depended on how long the lockdown would last, he said. “Landlords are likely to offer delayed rental payments initially. If the situation persists, there might be concessions,” Macdonald said.
CBRE Eastern China said food and beverage outlets, coffee shops, teahouses, fashion retailers, cinemas and entertainment venues would be most affected.
“The local authorities released a series of measures aimed at providing fiscal and logistical support for service industry businesses that have been hit by Covid-19, such as catering, retail, transport, exhibition and travel,” said Ivy Lu, head of research at CBRE.
However, property agents such as Centaline Property Agency (China), which rents 210 branches from individual landlords in the city, also hopes to receive financial support, said Andy Lee, CEO for southern China at the agency.
Sales of lived-in homes dropped to 12,000 deals in the second half of March after the city’s worsening Covid-19 situation, from 21,000 deals in the first two weeks. “Only two to three deals have been concluded this week, as many owners were reluctant about flat viewings even in districts not yet affected by the lockdown,” Lee said.
