Chow Tai Fook wins 40 per cent rent cut
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Jeweller Chow Tai Fook has reportedly re-signed a retail shop rental lease at a 40 per cent reduction.
It’s a rent reduction which will energise the retail sector, but not doubt send shivers through Hong Kong’s property community.
Several listed luxury retailers have in recent months been openly discussing expectations of reduced rents when re-negotiating with landlords over lease renewals. Their expectations are grounded in falling sales of luxury goods resulting from Mainland China;s gift-giving crackdown and a reduction in the number of cashed up, big spending Chinese tourists hitting the territory.
But the sort of reductions being discussed have ranged between 10 and 20 per cent.
According to Ming Pao, Chow Tai Fook has renewed the lease on its Mong Kok Bank centre branch – shops 6 and 7, on the ground floor.
The previous rent agreed was $1.3 million in 2012. The new rent rate is 40 per cent lower. Other terms, such as the lease term, have not been disclosed.
Questions & Answers
Q.What specifically caused the luxury retailers to expect lower rents in Hong Kong?
What specifically caused the luxury retailers to expect lower rents in Hong Kong?
Their expectations were based on declining sales of luxury goods. This was due to Mainland China's crackdown on gift-giving and fewer wealthy Chinese tourists visiting the territory.
Q.Which specific store location benefited from the 40 per cent rent reduction?
Which specific store location benefited from the 40 per cent rent reduction?
Chow Tai Fook renewed the lease for its Mong Kok Bank Centre branch. This specific location includes shops 6 and 7, both situated on the ground floor.
Q.What was the previous rent for the Mong Kok Bank Centre branch, before the 40 per cent reduction?
What was the previous rent for the Mong Kok Bank Centre branch, before the 40 per cent reduction?
The previous rent for shops 6 and 7 on the ground floor of the Mong Kok Bank Centre branch was $1.3 million. This figure was agreed upon in 2012.
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