Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Thursday, Mar 28, 2024

Hong Kong retail stand-off turns nasty with landlords suing tenants to recover arrears as recession deepens

Hong Kong retail stand-off turns nasty with landlords suing tenants to recover arrears as recession deepens

Wharf Reic, owner of Harbour City, sent court bailiffs last week to seal off some shops and also sued a cinema operator to recover rent arrears. More than 560 companies have faced liquidation threats since early 2019, while HK$134 billion of retail sales evaporated

The months-long stand-off between Hong Kong’s commercial landlords and retailers is taking a turn for the worse, as a third wave of coronavirus outbreak amid the city’s worst recession crimped retail sales, pushing many businesses to the brink of bankruptcy.

Harbour City, one of Hong Kong’s best-known luxury shopping centres and a favourite for mainland China’s shopping tourists, last week sealed off the stores of clothing retailers G2000 and Anagram in a dispute between the owners and the landlord Wharf Real Estate Investment Corp.

Wharf Reic also separately sued UA Cinemas last week for HK$1.92 million in unpaid rent at its Times Square building in Causeway Bay, while Hang Lung Properties has sued UA six times since May for HK$7.17 million owed at Amoy Plaza.

“Landlords and tenants are symbiotic” in business, said Annie Tse, chairwoman of Hong Kong Retail Management Association, adding that she is “disappointed” by the rising spate of legal disputes. “This reflects [the fact] that landlords lack social responsibility and [the empathy] to share in the burden” of Hong Kong’s retail slump, she said.

Disputes between landlords and tenants have been simmering through the past four quarters as the city’s economy slumped into its worst recession on record. More than 560 companies in Hong Kong have faced liquidation threats since the start of 2019, while HK$134 billion (US$17.3 billion) worth of retail sales evaporated in that span, according to the government statistics.

Hong Kong’s retailers, hotels and restaurateurs are taking the brunt of the economic woes, with some stores losing as much as 90 per cent in sales compared with last year, as average daily arrivals plunged to 3,000 in February from 200,000 in the first half of 2019. Some 200 shops shut their fashion outlets, restaurants and cafes in 14 shopping centres across Hong Kong in February, in an unprecedented industry strike to demand for rental relief, to no avail.

Unlike the UK and Singapore, Hong Kong’s laissez faire government has refrained from offering tax credits for across-the-board rental holidays to retailers, preferring to leave landlords and tenants to negotiate their own relief arrangements. These arrangements have led to uneven results.

G2000, a Hong Kong fashion label founded in 1980, paid just 80 per cent of its rent in the second half of 2019, when mainland Chinese tourists were deterred from visiting the city by anti-government protests, founder and chairman Michael Tien said. A lawmaker in the city’s legislature, Tien took his cue from most other landlords, who were cutting their rents by as much as 70 per cent, calling his unilateral discount a “fair compromise.”


Court bailiff shut and seized goods at a G2000 outlet in Harbour City to recover arrears. It has since reopened.


“Facing such an unreasonable landlord, I think there should be a voice,” Tien said in an interview with the Post. While Wharf – controlled by Peter Woo Kwong-ching, one of Hong Kong’s wealthiest businessmen – has legal ground to stand on, it is “insensible and unreasonable and unconscionable. The problem is, if big companies continue to perform like this, they would strike public discontent sooner or later.”

Harbour City offered G2000 a 50 per cent discount in rent if he repaid the 20 per cent arrears from 2019, according to Tien. Wharf, which is also the landlord of this newspaper’s premises at Times Square in Causeway Bay, declined to comment about its disputes with G2000 and UA Cinemas. UA and its parent the Lark Group did not respond to requests for comment.

Hang Lung Properties, one of Hong Kong’s largest commercial real estate owners, said it had offered rent relief to its tenants, including cinemas.



“Regarding the concerned cinema tenants, apart from offering rent relief to them, we will continue to liaise with them with the aim of reaching a mutually agreed solution and weather the storm together,” a spokeswoman said in a statement, adding that Hang Lung would “continue to stay in touch with our tenants to understand their operating conditions and provide them with support as appropriate”.

The acrimony in the world’s most expensive real estate market hints at the social problems that boiled over last year, partly contributing to the widespread anger that was exhibited in almost a year of anti-government protests, leading some times to wanton destruction of public property.

Developers “that earn billions of dollars a year” should help share their tenants’ pain instead of “cornering” them, or risk losing them entirely when they go bust, Tien said.

“Hongkongers are in a deep crisis, with many people jobless and many companies folded,” he added. “Even if it makes a loss, real estate developers and shopping centre owners make billions of dollars in profit every year.”


Exterior of UA Cinemas at Amoy Plaza in Kowloon Bay.


Hong Kong’s government, which allocated HK$5.5 billion to hand out HK$10,000 to every one of the city’s permanent residents – tycoon and pauper alike – to help them weather the coronavirus-led recession, should do more, Tien said.

The government, which sits atop one of the world’s largest currency reserves, should give landlords tax credits in exchange for their rent concessions, especially to small and medium businesses, restaurants and cafes, he said.

Faced with legal bills on top of business woes, some retailers are downsizing and selling their assets. Hoixe Catering Company sold an outlet in Shau Kei Wan earlier this month, while executives of cosmetics retailer Bonjour have also lightened their holdings.

“There has been a love-hate relationship and tension, regardless of the market sentiment,” added Tse, the industry association chairwoman. “But for landlords with extreme behaviour of issuing legal letters, taking to court or taking over the shops with bailiffs, there can be no discussion in such scenarios. This is of course not satisfactory and would affect the relationship.”

Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×