Street shop rents crash 80pc from 2016 peak

Street shop landlords in core business areas are slashing asking rents amid unprecedented social distancing measures, with the asking rent for a street shop in Causeway Bay plunging by about 80 percent from its peak in 2016.

The asking rent of a 1,130-sq-ft street shop on 482 Hennessy Road in Causeway Bay is currently about HK$120,000 per month, or HK$106 per sq ft, according to Centaline Commercial (Hong Kong). In comparison, its asking rent hit HK$600,000 per month four years ago.

Meanwhile, the asking rent of two street shop premises, which measure 750 sq ft in total, also plunged by about 48 percent to around HK$130,000 per month, from around HK$250,000 in June.

Short-term leases of street shops have become a new trend amid the Covid-19 pandemic, said Midland IC&I's (0459) chief executive Daniel Wong Hon-shing.

In a report this month, Midland IC&I expected shop vacancies in four core districts - Causeway Bay, Tsim Sha Tsui, Central and Mong Kok - to hit 15 percent in the third quarter.

In terms of rents, property consultant Colliers International forecasts that shop rents for tier-one streets in Hong Kong would slump 33 percent this year.

Shop vacancies in Tsim Sha Tsui surged 7.9 percentage points quarter-on-quarter to 11.9 percent in the second quarter, while the rate in Mong Kok rose 3.6 percentage points to 23.6 percent, said real estate services firm Cushman & Wakefield.

In the secondary market, a four-bedroom flat at Tai Koo Shing changed hands for HK$10 million, or HK$17,182 per sq ft, after HK$900,000 was slashed from the original asking price.

In the primary market, Wheelock Properties canceled the sale of 44 flats at Koko Hills scheduled for Friday, while Sun Hung Kai Properties (0016) is only allowing visits in groups of two at its Regency Bay sales office.

The one-month Hong Kong Interbank Offered Rate, which is linked to the mortgage rate, fell to 0.25393 percent yesterday.