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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding
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To: Elroy Jetson who wrote (12811)7/15/2024 2:35:57 AM
From: elmatador   of 13784
 
Hong Kong’s retail and F&B slump needs the attention of the government NOW.

Here are some photos I took at Stanley at noon yesterday! (Stanley is the area near TJ's house in HK)

Like the photo I took in Mong Kok night markets, the place was dead.

The main strip was void of people. Restaurants were empty. And so many shops were closed.

I had lunch at one of my favourite lunch spots (they do the best crepes in HK).

The place is usually packed at lunchtime on the weekends. There were far more empty seats this time than usual.

I asked the owner about his business. He said he was considering closing up shop.

Why?

We discussed the usual summer expat exodus, and the rising trend of locals travelling to Shenzhen and Guangzhou for the weekend for better-value - and more pleasant - experiences.

But it really boiled down to one thing: RENT.

There was zero interest from his landlord in passing on any rental reduction. ZERO.

Elmat: Below is what I saw in Dubai too !

The vast majority of Hong Kong retail landlords couldn’t care less about their tenants.

Because, unlike many other markets around the world, ownership is very concentrated in the hands of so few.

And when these giant oligopolies are more concerned about maintaining the price of their properties on paper than the yield that the properties can generate, the “free market” no longer works.

What ends up happening?

Landlords prefer to keep their properties empty than allow businesses to operate at reduced rents that reflect economic reality.

This spells disaster for Hong Kong’s small businesses. It puts the brakes on the economy. And it creates an awful experience for customers - both local and tourists - who need to walk through these ghost towns.

I’m a capitalist through and through. But Hong Kong’s retail nightmare needs to end.

I am openly calling for the Hong Kong government to consider two key policy moves at LegCo to address the retail and F&B crisis:

1. Retail rent control (less preferred option): to ensure landlord calibrate rents with retail consumption spend (e.g. linking rents to a retail index)

OR

2. Vacant property tax (preferred option): slapping a punitive tax on landlords who keep their properties vacant, ensuring they set a rental rate that reflects the realities of the market.

I’m sick of seeing my city on life support. And I’m not alone in saying this.

The author
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