The core areas are most affected by the trade war, social unrest, and the epidemic.
In response to the escalation of the COVID-19 epidemic, the government yesterday proposed a legislative amendment to temporarily ban the sale and supply of alcohol in about 8,600 restaurants, bars, and clubs with a liquor license in Hong Kong. Some senior shop agents anticipate that the new measures will inevitably increase the vacancy situation of the shop. The current shop market is more severe than that during the SARS in 2003 and the financial tsunami in 2008. It is predicted that rents will fall by 40% throughout the year, with a half or 60% in core areas.
Journalist Ngan LunLok
Woo Hon-Shing, the Chief Executive Officer of Midland Non-residential Properties, said yesterday that the government's alcohol prohibition in bars would directly affect the business of the operators. But he expressed that it's better to have short sharp pains than long dull pains considering current severe epidemic. He said: "Actually, the bars are basically out of business after the Lan Kwai Fong incident, so the result of tightening the alcohol selling is the same as not tightening. We should focus on controlling the epidemic as soon as possible and suffer through this period. "
Woo Hon-Shing: The vacancy situation worsens.
He pointed out that the business of bars and restaurants positively will be affected if the government regulates their operation. Even those who had intended to open the business earlier would delay due to the weak market conditions, so it is expected that the vacancy situation of the shops will worsen.
Woo Hon-Shing continued that Hong Kong has been plagued by the Sino-U.S. Trade war and social unrest since the previous year, and it is still unfinished. Last year, the Hong Kong economy had worsened under the amendment crisis. Plus, with the effect of the current epidemic, the shop market is in a downtrend.
He expressed that the renting in Hong Kong has fallen by at least 20% compared with that before the epidemic, and the decline may be as high as 40% throughout the year if the epidemic has not subsided. The rent decrease of core areas may be as high as 50% to 60% since the base rents in these areas are higher.
He bluntly said that the current market has frozen. He knows a person who runs a restaurant. There had been a large site with 60 tables in the evening market. One day he passed the restaurant, seeing only eight people around two tables, which is the tip of the iceberg in the market.
The HKMA has been tightening its mortgage measures for the past ten years, so current shop owners are mostly capable people. They would rather hold the shops in such a harsh environment than sell them. Thus, the data for the shop prices can be referred is less. However, in the case of declining rents, it is believed that the shop prices will also fall.
We haven't seen a market like this in 30 years.
Woo Hon-Shing, who has invested in the shop investment market for 30 years, admitted that he has never seen the same scene as today. He said: "I haven't seen it. The situation during SARS was terrible. And the market was hovering at a low level due to the effect of financial turmoil and science and technology stocks. But there had been transactions because there were bargains from speculators accounting many at that time. There also were transactions even during the financial tsunami. Recently, the transaction volume is little due to the three negative factors, coupled with the owner's unwillingness to reduce the price. "
