Italian brands in plea for rent cuts as protests hit sales
Request comes as protests hit sales at Central and Admiralty shops
Landlords in the prime districts of Central and Admiralty are being urged by Italian brands to offer short-term rent cuts as foot traffic has been hit by the prolonged Occupy Central protests, according to the president of the Italian Chamber of Commerce.
"Some of our members are suffering," said chamber president Fabio De Rosa.
He said the chamber's members in Admiralty and Central had seen a 30 to 40 per cent fall in foot traffic between the end of September and the end of October although the situation had slightly improved in the last week of October.
"I know they are discussing [the issue] with their landlords," said De Rosa.
The chamber has 260 members, including top brands such as Prada, Ferragamo and Gucci. De Rosa said most landlords were not prepared to respond to the request but Hongkong Land was trying to hear tenants' concerns.
Sources said street shops in Central and Admiralty suffered a double-digit decline in sales as the Occupy Central movement blocked some roads.
"Hongkong Land has turned down a rent cut request but will provide marketing support to the affected tenants to boost sales," a source said.
Hongkong Land declined to comment on the issue.
Some landlords waived the tenants' promotion levy in shopping centres. The levy was a regular monthly fee charged by landlords at a few dollars per square foot per month, sources said.
In Causeway Bay, small retailers had asked landlords for rent cuts after sales plunged as much as 50 per cent due to the protests. They complained they had had fewer customers as a result of road closures over the past month.
Swire Properties said there was some impact on vehicle flow at Pacific Place during the period when Queensway was closed off.
"Despite this, our operations remained largely normal. With the reopening of Queensway in mid-October, our operations have returned to normal," it said in a written reply.
Wharf (Holdings) spoke at a Jefferies summit earlier that retail sales at Harbour City and Times Square were affected, declining up to 30 per cent year on year during the first week of October, which was the "golden week".
"It is too early to evaluate how much of the business will be affected. If the issue cannot be solved in a short period of time, businesses will definitely be affected," said Adrian Lee Ching-ming, the chief executive of Champion Real Estate Investment Trust, which runs the Langham Place office and retail centre in Mong Kok, a hotbed of the protests.
Helen Mak, a senior director at Colliers International, said sales at retailers of luxury brands had been declining since the beginning of the year due to Beijing's anti-extravagance rules, which had curbed luxury consumption in Hong Kong. The Occupy Central movement further soured sentiment in a slowing sector, she added.
"The reality is that Christmas is coming, that would be a really important part of their business," said De Rosa, adding that if the protests go past the holidays, he expects brands to cut their budgets and marketing expenses for next year.
There is also a hidden impact.
"Hong Kong is not as perfect as it used to be because people have a big question mark: will this happen again?" said De Rosa.