Hongkong Wang Pu Rents Fell Nearly 50%. What Happened To Hongkong?

According to the latest news, the rental of Hongkong's booming shops has fallen by nearly 50% now. Under such circumstances, it is a big question whether the shops in Hongkong can achieve the return of value.

Since last year, the government has tightened up a multi line policy.

After the frequent incidents of backwater customers and the occurrence of expensive drugstores, the retail industry in Hongkong has felt a strong cold wind since the second half of last year.

Although the government tried to restore the declining trend by promoting tourism projects and appropriating funds, it still failed to stop Hongkong's retail industry getting colder and colder.

Affected by this, the rental of Tongluowan's core retail outlets, including Hongkong, Tsim Sha Tsui, central and Mong Kok, fell by 5%~7% on a quarterly basis. Among them, the rent of the first tier shops in Tongluowan fell by nearly 50% compared with the peak in 2013.

According to the securities times, the total retail sales value of the total retail sales in the first two months of 2016 decreased by 13.6% compared with the same period in 2015.

After the price change during the deduction period, the total retail sales volume in February 2016 decreased by 19.5% compared with the same month in 2015, and the total retail sales volume in the first two months of 2016 dropped by 12.3%.

Zheng Weixiong, chairman of the Hongkong Retail Management Association, said that the drop in February this year even surpassed the "horror" of SARS and 2009 financial tsunami, the biggest monthly decline in 17 years.

"We expected that in addition to the categories of jewellery and department stores affected by the reduction of tourists, even the supermarkets and fresh meat categories that we thought the Chinese New Year would stimulate consumption increased.

Even if the value of fresh fruit vegetables increased by 8.1% a year, it was only because of cold weather that vegetable prices rose, and actual retail sales fell by nearly 28%.

Zheng Weixiong said that the value of food and supermarket sales declined, reflecting Hongkong's poor consumption, or being influenced by economic confidence, stock market and property market decline, which he described as "frightening".

Also said that in January and February is the lunar new year consumption schedule, but two months sales value fell by nearly 14%, has not seen in the past many years.

Looking at the past March, Zheng Weixiong said that the impact of Easter holidays on Hong Kong outbound travel has also reduced local consumption, so the value of sales in March will drop by nearly 10% a year, until 7 to August, and it is estimated that there is no big rebound.

Zheng Weixiong frankly said that although the retail industry has gone from bad to worse, its operating costs have not declined. Some retail stores have decided to increase their salaries by 3% to 4% last year. Although some of the shops have reduced the rent by 40% to 50%, there is still room for rent increase.

According to the twenty-first Century economic report, with the sharp decline in the number of visitors to the mainland, the rental of the golden section of Hongkong has fallen off the cliff.

"The sales volume of all kinds of commodities has declined all over the world, which is very rare, with the largest decline in jewelry, watches and electronic products.

As a result, the rent of street shops in the first tier area decreased by 5%-7% on the average in the first quarter of this year, while the rent in Causeway Bay fell by 51% compared to the peak level in 2013.

Lin Ying Wei, director of Hongkong business department, told reporters at a press conference in April 6th.

Some paved streets of Russell street, Tongluowan, Hongkong, have been awarded the "most expensive shop in the world". With the Hongkong luxury jewelry retail industry entering the cold winter, the luxury brand is no longer a high price.

He disclosed that at the end of last year, shop 3-5, No. 8, Russell street, was replaced by Cartire, a local cosmetics retailer in Hongkong. The rent was rentals from HK $2 million 760 thousand to HK $1 million 600 thousand and HK $42%.

Coincidentally, on the same street, once the "shop king" called Russell Street 59 underground B1 to B3 berths, the rent was as high as HK $2 million 500 thousand per month.

It was previously leased by the British clocks at HK $2 million 500 thousand per month, but it remained vacant for nearly half a year.

According to the information of the Hongkong land registry, this "Pai Wang" was rented by SWAROVSKI. The lease started in January 2016, with a monthly rent of HK $1 million 500 thousand, which is 40% lower than that of the old lease.

In addition to the sluggish retail market, economic slowdown and social instability have led some retailers to lose sight of business prospects and to terminate their tenancies in advance, thereby saving the rental cost of the remaining contracts.

"As far as we know, some clocks and cosmetics companies are negotiating with the owners to cancel the contract ahead of schedule, mainly because of the rapid expansion in previous years, and with the obvious pressure on sales, and the lease is not yet expired, they face greater cost pressures."

Lin Yingwei pointed out.

According to statistics from Dai tie Liang, the four core shopping areas in Hongkong, namely Tongluowan, Tsim Sha Tsui, central and Mong Kok, are down by 5%-7% in the first quarter of this year, which has already been reduced by 34%-50% compared to the high level in 2013.

"We predict that the rent of the shops in the first half of this year will be reduced by about 10%, and the rent of the street shops in the first tier areas has dropped to around 2010 levels.

Compared with the sharp drop at the end of last year, this year's declines have slowed down, and some of the ideal shops have been leased as the rent has been significantly reduced.

Therefore, we expect that the rent of shops will stabilize in the middle of this year.

He said.

However, "as the rent of the shops in the frontline retail zone falls back, some businesses are taking the opportunity to relocate to the front-line berths, including fashion, ornaments, footwear and cosmetics, which have a wider consumer group, and have a case for luxury shops.

At the same time, foreign brands also want to seize the advantage of the rent reduction and expand business in Hong Kong.

In recent months, many Japanese and Korean brands are actively looking for Hongkong's berths, which are from fashion, cosmetics, lifestyle and restaurants.

It is worth mentioning that, despite the downward trend of retail rental, office buildings in major business districts such as central Hongkong are still hot.

The backer is the mainland banking and financial institutions that are expanding their business in Hong Kong.

According to DTZ's statistics, office rents in Hongkong's core business district continued to rise in the first quarter of this year, with the highest increase in the rent of super grade A office buildings in the central region, with a quarterly increase of 5.3% to 128.88 Hong Kong dollars per square foot per month, while the overall rental of Grade A office buildings in the central region rose 4.3% to 115.64 Hong Kong dollars per square foot per month.

Xiao Lianghui, managing director of DTZ Hongkong, said: "the rent in the central area has continued to rise because the leasing demand of Chinese financial institutions is still strong, which accounts for 49% of the new lease area in the first quarter.

Banks and financial institutions plus insurance companies accounted for 80% of all new lease areas in the first quarter of the whole territory. "

According to the data of Hongkong Tourism Development Bureau, the total number of Inbound Visitors fell by about 13% in the first two months of this year, with 18% of mainland passengers and 7% of overseas visitors.

It plans to rebuild Hongkong's tourism image and enhance its publicity with nearly HK $100 million, hoping to stimulate tourists to visit Hong Kong and spend.

But at the moment, it has little effect.

Liu Zhanhao, honorary president of the Hongkong Federation of industry, said that the global economy and the mainland's economic downturn, coupled with the fact that in the past year, a small number of people in Hongkong have been rude to mainland tourists, which is enough for mainland tourists to step back to Hongkong and have a great impact on many industries in Hongkong in the long run. Now, the impact is emerging.

The Hongkong Brand General Chamber of Commerce has commissioned a study conducted by Hong Kong Polytech University, which shows that Hongkong

Faced with problems such as rent and gold prices, over reliance on the mainland market and changes in tourist consumption patterns (from purchasing luxury goods to daily necessities).

The chamber of Commerce believes that even expanding the free trade in the mainland can only alleviate the pressure of retail trade in a short time, and can not solve the essential problems faced by the industry, such as the lack of local brands.