Rent of stores in Mongkok touches 1000 per square feet

Article from (Reporter: Fong ChuoYan) Leading by the factors of itineraries and the continuous fall of unemployment rate in Hong Kong, the prosperity in sales and service industry is backing up the rise of rents of stores. Senior director of Cushman & Wakefield Hong Kong branch Wu expects that after the release of QE3, there is still room for price raising in the store market. Particularly in Mongkok, the rent of stores raised 43% to around HKD 1000 level. Combining the effect of value addition of properties, it is estimated that the rents of store in Hong Kong will increase 5% to 15%. There is also a point you have to note that there is still room for price rising for rents of stores. On the contrary, there exists a warning that the growth in sales amount has slowed down from May. Cushman & Wakefield: QE3 pushed investors to add capital Wu WingSi believes that the effect on the store market is quite stimulating since the policy did not have a limitation on the store market. It is estimated that rents of stores will continue to rise and investors will put a focus and a heavier ratio on it. The investors may enter the market through some low-valued stores. On the other hand, for traditional central store locations, Wu WingSi is optimistic that the stores in Central and Causeway Bay will still be having a 5% to 10% increase. Since the supply of stores in Central is limited while companies with good brands hope to stay in main streets, Wu WingSi points out that most of the stores and brands hope to “get a place” in streets like Queen’s Road. However, the rents of stores remain high and so it leads to the stores which located on streets that are connected to main streets like Wellington Street and Lyndhurst Terrace. For your reference, the rents in Central has hold a record of HKD 1,500 per square feet and has been increased by 25% when comparing to the last quarter. Source information also shows that the rent of a Bonjour store located on 6-8 Kai Chiu Road with an area of 16,000 square feet is HKD 5million per month. Wu WingSi points out that Russell Street in the location has already broken the record of rents mainly due to a move in by a famous jeweler brand. And for the opening of Hysan Place at Lee Gardens and the move-in of another branch of Apple will also heat up the store market. In this month the rent of stores is around HKD 2,000 per square feet and has raised 18% when comparing to last quarter. Itineraries have slowed down and so as the rents of stores in Tsim Sha Tsui However, for the stores in Tsim Sha Tsui, since itineraries have slowed down, there is pressure on the rents. Wu WingSi reveals that she does not hold an optimistic view on those stores. This is because those stores are over-relying on itineraries. We could see that the shopping malls in the same location are changing their target customer group from itineraries to local customers. She expects that the rise of rents of stores in Tsim Sha Tsui in the coming quarter or two will only be around 1%. The current rent is around HKD 1,300 per square feet and has recorded a 30% increase compared to last quarter. For stores in Mongkok, most of them are shops selling electronic goods and Gold and has no demand for branded fashion wears; there will be limitations for the increase of rent. Wu WingSi also points out that the rent of stores in fact has an increase, but since the growth of sales amount has been slowed down since May, it is a warning for all of us. Although there are still some international famous branded companies move in as they would like to create another path in order to reduce the effect by Euro-debt crisis. They would use Hong Kong as a step stone to the Chinese market and so they will continue to move in, but the transaction quantity has already been decreasing.

28hse - No.1 HK Property Portal Squarefoot - HK Premium Property Portal