Bar coffers run dry from constant closuresProperty | Staff reporter 18 Mar 2021
Hit hard by constant closures ordered by the government as part of anti-pandemic measures, some bars have seen rents reduced.
The industry has been ordered to close down repeatedly as part of measures to curb the virus and businesses have faced severe challenges as a result. According to industry insiders, about 10 percent of bars have shuttered in the past three months, involving 140 shops. It is expected that shop rents will continue to be adjusted because of this.
A ground-floor bar at 37-39 Lockhart Road, Wan Chai, with an area of 750 square feet, was recently rented out for about HK$90,000, or HK$120 per sq ft.
According to the property's real estate agent, that was a 28 percent decrease from the previous rent of HK$125,000 per month.
Data from the Land Registry shows the landlord purchased the shop for HK$8 million in 1991 and held it under the name of Gold Bright Trading. With the latest rent, the rental return is around 13.5 percent.
With no end in sight to the pandemic, the industry says bar operators are facing unprecedented difficulties.
A number of upstairs shops at Knutsford Terrace in Tsim Sha Tsui received waivers for a month's rent during the two-month suspension.
But overall, most landlords have been unwilling to reduce rents amid the challenging business environment, with industry insiders saying that those on Wan Chai's "bar street" Lockhart Road have been adamant.
The insider added that there are about 1,400 bars in Hong Kong, but about 10 percent of them - a total of 140 - have closed over the past three months and about 6,000 people have become unemployed.
However, it is understood that the bar street did, in fact, record several rent reductions. For example, Shop E on the ground floor of Hong Kong Building at 137-147 Lockhart Road, with an area of about 450 sq ft, was leased to a restaurant for HK$66,800 per month, or HK$148 per sq ft.
That was about 15 percent lower than the old lease of HK$79,000 - returning to levels last seen a decade ago.
According to the agent, the shop is located in the heart of Wan Chai, but rents in the area have fallen sharply since the social unrest began.
Coupled with the outbreak of the coronavirus, the entire market has become sluggish and landlords have resorted to attracting restaurants to take up new leases with low rents.
According to Midland IC&I, Shop D on the ground floor of 137-147 Lockhart Road, which has an area of 350 sq ft and an attic of 1,100 sq ft, was rented out at HK$110,000, or HK$153 per sq ft - close to the current market level.
In addition, the lease for a ground floor shop with an attic at Diamond Mansion on No 466 of the same street, with a total area of about 1,200 sq ft, has been renewed.
The tenant, an optical shop, now pays a monthly rent of about HK$150,000, or HK$125 per square foot, a 14 percent decrease compared to the shop's previous reported rent of HK$175,000.