Watchdog urges Hong Kong government to buy shares in The Link Reit to protect small businesses
Link Watch says government should buy shares in trust that runs 150 malls
Big chains and franchises are driving small shops out of public housing estates, a concern group says, urging the government to buy a quarter of shares in a real estate investment trust that manages about 150 shopping malls formerly run by the government.
The Link Reit, the largest real estate investment trust in Asia, has been managing the malls after it took over the investment portfolio of the Housing Authority in 2005.
"Small businesses are being driven out of the malls. People living in public housing estates are left with few shopping choices," said Michael Fung Siu-pan, convenor of Link Watch.
The group recently examined the shop composition of 22 malls at public estates run by The Link. It found that big chains made up 76 per cent of the 2,075 shops in the 22 malls, up from 70 per cent in its 2012 study.
McDonald's and Japan Home Centre are the most common shops in the surveyed malls with 30 branches each.
They are followed by 29 7-Eleven convenience stores and 28 Mannings shops.
Group chairwoman Sophia So Lok-yee said the government should buy 25 per cent of Link shares so that it could have power over how businesses in the malls are run.
She also said that The Link was being "unfair" in the way it charged rents for small businesses.
Tenants told her that on top of a monthly rent, which can be about HK$20,000 for a small shop, they needed to tell The Link about their business performance every month. If the performance was satisfactory, tenants were required to pay extra rent to The Link, So said.
However, a spokesman for The Link rejected the criticism, saying that 60 per cent of all tenants were small retailers. He also said that on average rents make up only 10 to 15 per cent of the tenants' operating costs.
"As shown with an occupancy rate of close to 95 per cent and a retention rate of 80 per cent, we have been creating a thriving, sustainable business environment for tenants," he said.
He added that it was common practice in the retail market for tenants to pay additional rent if their performance was good.
Housing minister Professor Anthony Cheung Bing-leung said in 2012 that it would not be in the public interest for the government to buy shares in The Link.