Share prices of protest-battered shopping centre owners may go even lower, meaning investors should wait to buy, analysts say
- Wharf REIC’s share price has fallen 23 per cent since protests turned violent in July
- Part of mall owners’ rents are tied to tenants’ revenues. That’s not good, these days
Battered shares of mall owners – like Wharf REIC, down 23 per cent since protests turned violent at the start of July – may fall further, stock analysts say. The time for bottom fishing may not be here yet.
Wharf REIC’s properties include such luxury shopping palaces as Times Square in Causeway Bay and Harbour City in Tsim Sha Tsui, areas of Hong Kong that are normally teeming with mainland tourists on buying sprees.
But these are anything but normal times.
Increasingly violent protests – now in their sixth month – have dried up foot traffic from the all-important mainland shopper as well as locals. Malls have closed early. And even when they are open, many stores in them have far more employees than customers.
One retailer – Tse Sui Luen (TSL) Jewellery – saw its first half profit plunge 94 per cent, amid the worsening protests as well as the long US-China trade war. A visit to its outlet at Times Square at lunchtime Friday found three clerks but no customers.
The danger for mall owners is that rents are partly tied to how much revenue tenants earn. Also, some retailers have asked for rent reductions. And, if protests continue for a very long time, some outlets may simply close at malls or even go out of business.