Shoppers have disappeared from the streets of Hong Kong, and with retail sales dropping, some store owners in Asia’s most expensive city have resorted to selling the shop.
A store along Nathan Road in Mongkok — normally one of Hong Kong’s busiest shopping districts — was sold at a 54 percent discount recently, according to government records, while another store in the city’s priciest retail area was sold via public tender on Wednesday.
The fire sale of Hong Kong shops comes as one property consultant predicts that retail sales in the city will continue to fall off a cliff as the COVID-19 crisis follows months of protests in the city.
Le Saunda Boss Sells in Mongkok
In Mongkok, a property owner registered as Marces Lee Tze Bun, who shares the same name as the founder of footwear and accessories retailer Le Saunda, sold a 5,314 square foot (494 square metre) unit in the Le Diamant building for HK$52 million, after buying the property for H$95 million in August 2013, according to Land Registry records.
The sale of the two-floor unit, which took place at a price per square foot of just HK$9,785, represents a 45 percent discount off of the purchase price, and notched the worst loss this year for a seller in the 20-storey Ginza-style commercial building.
Lee sold the fourth and fifth floor unit in the building at 703-705 Nathan Road to the Pun U District Association Of Hong Kong, according to government records.
That sale in Mongkok took place just over 2 kilometres (1.24 miles) up Nathan Road from where, earlier this year, a Shenzhen developer had sold a shop in Tsim Sha Tsui at a 41 percent mark-down.
The discounted Nathan Road deals may be a sign of Hong Kong’s retail future as one international property agency predicts more hard times in the city.
“We expect retail sales value in the coming months to continue to fall to a cliff,” Knight Frank said in a report released this week.
The property consultancy added that, “with vacancy rates of street shops keep rising, shop rentals are expected to shrink further, which could be faster than the drop in retail sales.” The overseas firm said that it expects the COVID-19 pandemic to have a long-term impact on Hong Kong’s retail scene, which will require a lengthy recovery.
Knight Frank made its prediction after Hong Kong retail sales plummeted 21.4 percent in value during January, compared to the same month a year earlier, according to the government’s latest figures.
Causeway Bay Property Sold via Tender
In another sign of pressure on Hong Kong landlords, a three-storey building near one of the city’s poshest shopping centres was sold via tender.
Isle Noble Investments Ltd, an overseas registered firm described in a report in the Hong Kong Economic Times as representing an investment consortium, paid HK$280 million to purchase the retail property at 6 Sharp Street East. The seller of the property, which is just two minutes’ walk from Times Square, was a private investor named Susie Lam Mo Chu, with the sale taking place through a private tender managed by CBRE.
The US-based brokerage had kicked off the tender for the 3,000 square foot property in January, with the sale of the property, which is said to be currently tenanted, taking place at a rate per square foot of just over HK$93,333.
In November of last year US-based property consultancy Cushman & Wakefield had ranked Causeway Bay as the most expensive shopping street globally, with average retail rents in the district three stops east of Central standing at $2,745 per square foot per year.
Since the research was conducted for that survey during the first half of 2019, however, Hong Kong has been rocked by months of protest followed by a novel coronavirus that has shutdown visitors and kept local shoppers at home.
Earlier this month, local real estate brokerage Midland IC&I predicted that retail rents could fall by as much as 40 percent this year, according to a report in the South China Morning Post.