Sun Hung Kai Properties, which owns 12 million sq ft of retail space in Hong Kong, said it will waive rents and other expenses on days its shopping centres remain closed because of the protests. Hong Kong’s largest developer by market value has had to close some of its shopping centres for days, especially on weekends because of the protests, as rampaging mobs damaged public and private property. “Although this was meant to protect the safety of customers, businesses and staff, SHKP decided to waive the rents and other related expenses of these affected tenants. We hope this can ease the pressure … and to stand shoulder to shoulder with the businesses to ride out the current difficult times.” The city’s economy has been severely hit by the social unrest and threatens to undermine its role as Asia’s leading retail hub. Retail sales in the city dropped 23 per cent year on year to HK$29.4 billion (US$3.76 billion) in August – the worst for a single month on record. Hong Kong’s tourism too suffered its worst downturn since the severe acute respiratory syndrome outbreak in 2003, as arrivals slumped 40 per cent year on year in the same month. It is more than likely that these figures could worsen for September and October when data is released. At least eight of its shopping centres have had to remain shut for days. World Trade Centre, in protest-hit Causeway Bay, had to close operations for five days. Six other malls, including New Town Plaza in Sha Tin, where some of the worst violence has taken place, were closed on October 1 and 5. APM in Kwun Tong remained shut on October 1. Hong Kong protests: short-term leases for street-level shops could become the norm On Tuesday, Hang Lung Properties, which owns Fashion Walk in Causeway Bay and shopping centres in Mong Kok and Tsim Sha Tsui, said they would cut rents for retail tenants. “In view of the retail headwinds in Hong Kong, Hang Lung Properties has been liaising with our tenants with the aim to help them overcome the difficult times. We have provided rental reductions to tenants by taking into consideration their degree of impact from recent public activities, shop location and rental terms,” a spokeswoman said. Swire Properties, which owns 2.5 million sq ft of retail space, said it has offered temporary rental adjustments to most tenants in Pacific Place and Cityplaza. Hysan Development said temporary rental adjustments have been offered as one possible solution. MTR, which owns malls at the city’s railway stations, said it would adjust rents and offer subsidies for days that the stations and shopping centres were closed. “Well, I think that’s a very good sign. You know that’ll help the retailers,” said Nick Bradstreet, managing director and head of leasing at Savills. Cosmetic chain Sa Sa International Holdings, which saw same store sales plummeting 28.5 per cent in Hong Kong and Macau in the three months to September, could benefit from landlords’ largesse. Simon Kwok, chairman and chief executive of Sa Sa, said rent was one of the group’s largest operating expenses and primary cost saving target. “Some high street shop owners are willing to reduce their rents on a temporary basis during this difficult time,” Kwok said. According to Savills, overall shopping centre rents have reduced by 14.2 per cent during the past three months, with those on Hong Kong Island down 13.6 per cent, Kowloon 12.7 per cent and New Territories 16.4 per cent. “I think October is gonna be just as bad as September. We don’t see any improvement as the protests continue and it’s having a big impact,” said Bradstreet. “I don’t think we’re going to see any improvement to November now.” With no resolution in sight, market observers said that the impact of the protests even if they were resolved immediately would be felt for at least 12 to 18 months as it did after the Occupy movement. “Unlike the Occupy Central protests in 2014, the recent turmoil has had a far greater impact on retailers and landlords, as the protests [have been] spread across various districts,” said Lawrence Wan, senior director of advisory and transaction services for retail at CBRE. “If the current social unrest continues, the retail market is likely to suffer from a prolonged downturn.”