Irrational fears I have seen displayed by Hongkongers: not walking on a footpath along a field in England because there were a dozen dairy cows 200 yards away; refusing to stay in a venerable old hotel in Vietnam because of ‘ghosts’; turning down a very nice government apartment (choosing one provided for more junior civil servants) because it had a view of a cemetery; and avoiding fish from anywhere in the world after the Japanese tsunami of 2011 because of ‘dead bodies in the sea’.
Now the number of Honkongers visiting Japan drops by 33%, causing scheduled flights to be cancelled, because a manga artist years ago predicted an earthquake for this month.
Well, no-one likes earthquakes. On the other hand, we all (or mostly) love property-value disasters…
A noteworthy story on shop rents from the SCMP…
A 1,036 sq ft shop on the ground floor of 50-52 Russell Street was leased to Skechers for three years at a monthly rent of HK$360,000 (US$45,860), or HK$347 per square foot, according to Rickey Chan, managing director of Dorbo Realty.
Agents said Patek Philippe’s lease had it paying HK$550,000 a month, meaning Skechers was paying 35 per cent less than the Swiss watchmaker, though the monthly rent once surged to HK$1.86 million when the market was at its zenith.
That was in 2018. In other words, the rent is less than a fifth of what it was seven years ago. Some people might look at this and be shocked at the massive decline. Others might wonder what kind of lunacy took hold when someone signed a lease at nearly HK$2 million for a 1,036 sq ft space.
(Are there any real-estate agents not called Ricky?)
And Bloomberg reports that New World wants to sell its ‘flagship’ (as in ‘white elephant’) mall out near the airport…
The company has held early-stage discussions with the Hong Kong airport authority on its plans, the people said, requesting not to be named because the matter is private. The talks are preliminary and subject to change, the people said.
The mall has been evaluated at a price range of HK$15 billion ($1.9 billion) to HK$17 billion, one of the people said. That means selling at a loss considering the company invested HK$20 billion for the project.
Ouch, ouch, ouch.
Even if Hong Kong had continued to attract tens of millions of Mainlanders buying luxury goods – a big if in itself – it still never made sense to put a giant mall outside an airport in a spot miles from anything else. People on their way to catch a flight do not leave early to go shopping before checking in. People who have just landed even less so.
Now, the only possible way to attract traffic will be to offer unique and affordable mass-market attractions that could, conceivably, lure local people from the western Kowloon/NT region. But that would imply low rents, which in turn spells financial ruin for whoever owns the place.
Which brings us to the intriguing question: who on earth is going to buy the thing?
(Are there any real-estate agents not called Ricky?)
There may be a few but I suspect that if every Ricky and Raymond left Hong Kong, the economy would collapse. On a related note I wonder if being locally born Chinese and having an add-on English name will ever be considered soft resistance. Would be awkward for many in Govt.
SCMP on 11Skies:
“The HK$20 billion complex forms part of SkyCity, which will have more than 800 shops, 120 dining options, an indoor entertainment hub and three high-grade office towers.”
… none of which is wanted or needed. No way is anyone going to buy 11Skies except at a substantial discount to cost.
More retail news from Nikkei:
“In Tsim Sha Tsui, Laopu Gold leased a 10,000-square-foot flagship store in the Silvercord shopping center for about HK$1.5 million ($191,000) per month, according to local media. The same spot previously housed Burberry’s flagship store and commanded a peak monthly rent of HK$6.5 million.”
I am a clairvoyant. The buyer of the mega-mall will convert the whole thing to luxury apartments for airline pilots and other people who actually don’t want to live in Hong Kong but have no choice. The development will also include an indoor ski ramp with fake snow.
Re shop rents, the story is not just the decline in lease cost, but also in quality… a location formerly coccupied by an ultra-high-end luxury watch brand now sells unstylish easy-to-don shoes for old people. There’s an HK-in-2025 metaphor in there somewhere.
As a suggestion, why not demolish the 11 Skies mall and turn it into a 9 hole golf course with an excellent Thai restaurant beside? Oh,….. I’ll get my coat.
Turning that into housing would be hard, but they probably could just put whatever AI/biotech/crypto hub they are putting in the North somethingbolis into that mall? These business parks doesn’t need to be near places other than an airport or a bridge to somewhere.
I must display some sympathy for New World. Of all our developers, NWD was the most open to listening to and incorporating the views of the community. Some examples are the Avenue of the Stars makeover and the preservation of State Theatre. It engaged, organized site visits, etc.
SHK, Henderson, Cheung Kong and the others would not deign to entertain any approach from Joe Public nor meet to discuss issues.
“…luxury apartments for airline pilots and other people who actually don’t want to live in Hong Kong but have no choice.”
Airline (or parcel transport company) pilots do have a choice though if they don’t want to live in HK: they can just jumpseat to HK from other places (such as Clark/Angeles City, P.I.) to begin a work day. Other people not so much, unfortunately.
We’ve seen this movie before. The geniuses at Tamar will throw in several billion dollars of public money to entice someone to take a sweetheart deal to make the embarrassing flop go away, or else my name is not Mike Rowse.
I’ll never understand how businesses in HK can cover these rents.
Let’s make a few assumptions;
1) That the lease that has been at agreed at $360k, includes two months rent-free per year. Allowing the landlord to maintain a higher headline rent, while offering the tenant a more ‘affordable’ effective rate of $300k.
2) That a pair of Sketchers retail at an average of $1,000, with a healthy profit margin of 70%.
This means that they’re needing to sell 15 pairs of shoes every day of the month. That’s just to cover the rent, never mind pay any staff wages or run any air conditioning, or generate any profit.
Can someone make it make sense??
Get your heads around this obfuscation
https://news.tvb.com/tc/pearlnews/687b25bc54d16ed89ef135f4/TVB%20News-Secretary-for-Justice-said-definition-of-soft-resistance-should-not-be-complicated
A cynic would opine that he considers that the term ‘soft resistance’ has a ‘sexy’ ring to it.
@Mary Melville – in the spirit of Paul Lam’s injunction to face things squarely, I am glad to see that he only classifies stirring up “irrational hatred towards the government” as soft resistance. Presumably this means rational hatred is acceptable.