A shop in Hong Kong’s Tsim Sha Tsui shopping district has been sold at a more than 41 percent loss as the city’s virus control measures crimp retail sales and push down commercial rents.
A property investment firm believed to be controlled by the chairman of Shenzhen-listed Kaiser China Culture (SZ:2425) this month sold the 766 square foot (71 square metre) shop along Nathan Road for HK$40 million, according to records from Hong Kong’s Land Registry, after having purchased the property for HK$68 million in 2010.
The investor’s 41 percent haircut is said to rank as the worst loss on a percentage basis that the Tsim Sha Tsui shopping district has seen in decades.
The marked down deal comes after retail sales in Hong Kong fell for the 12th consecutive month during January, according to government figures released earlier this month, with shoppers having since nearly deserted the city’s streets as fear of the novel coronavirus has worsened in recent weeks.
Prime Shop Languished for Two Years
KS Properties sold Shop No 64 in the Park Lane Shopper’s Boulevard complex along Nathan Road, after having reportedly first put the unit on the market two years ago at an asking price of HK$85 million, according to a report in the Apple Daily. At the reported sale price the buyer had paid HK$52,219 per square foot for the ground floor shop.
The registered directors of KS are Chan Yuk Kwan and Kaiser China managing director Cheng Hop Ming, with the Shenzhen-based apparel and entertainment company having once used the shop as an outlet for Kaiser Fur, one of its garment subsidiaries, before switching to leasing out the property in 2016.
Most recently, the shop had been rented to Lung Kee Watch for HK$90,000 per month, but the local timepiece retailer had moved out around six months ago. KS Properties had subsequently cut the asking rent to HK$72,000 per month, but the shop remained vacant this month.
After first putting the shop on the market in 2018, KS Properties had cut the price to HK$65 million last year as Nathan Road regularly hosted showdowns between protestors and police. The property firm then cut the price by 53 percent in order to achieve this year’s sale.
Hong Kong Retail in Crisis
The decision to sell off the high street property comes after retail sales in Hong Kong fell 21.4 percent in January, compared to a year earlier, clocking in at just HK$37.8 billion ($4.86 billion), after falling 19.4 percent in December, according to the most recent government data.
The change in fortune for Tsim Sha Tsui, which had been a favoured destination for mainland shoppers in recent years, has been precipitating cut rate deals for a number of investors.
In January, Kailong Real Estate revealed to Mingtiandi that it was preparing to start work on a project in the southern tip of the Kowloon peninsula after a joint venture led by the fund manager had picked up a building on Cameron Road for 30 percent less than the seller’s earlier asking price.
Kailong, which specialises in value-add commercial projects had reportedly paid HK$448 million to purchase 37 Cameron Road after having previously picked up an adjacent Tsim Sha Tsui site.
In February distress for Hong Kong retailers became acute enough that a reported 200 businesses closed their doors and declared a “no business day” to demand rent cuts as the combination of viruses and protests kept shoppers away.