In Markets

Protests and world’s most expensive rent, not a good cocktail for Hong Kong retailers

Hong Kong and the whole world clearly remember June 12, renamed “Black Wednesday”, a day, during which key luxury players like Chanel in Central, Pacific Place mall in Admiralty, were forced to shut down their doors for safety reason.

Source : SCMP

Several events around the city were also cancelled because of the protests, which paralyzed the city centre slowing down the fast-pace of its inhabitants and with it the business.

SEE ALSO : Chinese shoppers prefer Italy

After 4 consecutive months of fall for retail sales, June sales results are not likely to be positive, and with almost every past weekend affected by massive protests around the city July will not be any better.

News about the recent escalation in violence after the last weekend and the recent selection of locations now targeting Mainland Chinese tourists in Tsim Sha Tsui, Sheng Shiu and Shatin with the Sunday incidents in New Town Plaza, are starting to spread out in China via social media.

Wechat and Weibo feeds are warning Chinese tourists, and pushing them away from Hong Kong, and this inevitably causes a deep crisis for the retail market in the territory. Chinese tourists are already considering other destinations for their travels such as SEA and Europe. Indeed, SEA countries have seen an increase in inbound tourism from China, and Europe has registered a peak in Chinese presence recently.

In a city where rents are by far the world’s most expensive for retail and landlords are still blindly looking at hiking their rents based on last year good performances, recent geo-political problems are not bringing any good. This explosive cocktail of Trade War + efex gain vs RMB + protests will place a number of brands and retailers in a very difficult situation over summer and in Q4. This may lead to more closures and bankruptcy.

According to a recent report from HSBC published on Tuesday 16th, the number of visitors from the mainland will continue to grow in 2019, but at a slower rate than it was forecasted before millions of people took over the streets to demonstrate against the now-suspended extradition bill.

Source : CNN

HSBC has already revised the numbers of the estimated growth of mainland tourist arrivals for the year, bringing it from 9.7 to 9 percent, which is now 350,000 less visitors compare to their initial forecast and this might just be the beginning if the government and the protesters are not making progress quickly.

According to a few blogs (non-official sources), next protests should hit different retail districts and popular touristic destinations before end of July.

Some sources refer to the following calendar (dates and locations may change):

7/20 Mong Kok

7/20-21 Causeway Bay

7/27 Hung Hom

7/28 Tseung Kwan O and HK Western district

The source for the calendar is Headline Daily.

All the tensions and lack of visibility in Hong Kong continue to reduce local shoppers’ desire to spend as well.

SEE ALSO : Europe welcomes more Chinese tourists

Landlords should find ways to retain their tenants and support them in this difficult period instead of pushing them to move out from Hong Kong or choose high-street retail space with more reasonable conditions. Hong Kong retail landscape is in danger and the image of shopping paradise could soon been destroyed and leave shopping malls empty.

 

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