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Times Square and Harbour City hit by ‘perfect storm’

The parent company of Times Square and Harbour City says business for its retail tenants has become more difficult in the wake of ongoing protests and the China-US trade war.

“It is like a perfect storm. External factors and internal factors are all erupting at the same time,” said Wharf Real Estate Investment Company chairman and MD Stephen Ng, after releasing the half-year results. 

Sales at Harbour City fell 1 per cent in the first half to HK$18.5 billion (US$2.36 billion), while Times Square fared even worse, sales there declining 3.6 per cent. 

Ng warns worse is to come, with widespread predictions of declining retail sales Hong Kong wide in July and August. 

“We will be affected. Overall, tenants’ businesses [have become] more difficult.

“We all know Hong Kong’s retail and catering industries are [facing challenges], particularly in shopping areas such as Tsim Sha Tsui and Causeway Bay,” said Ng. “The second quarter was worse than the first quarter. But it is not a significant plunge. It is worsening gradually.”

Ng said it was possible the impact on the retail sector could be worse than the decline following the 2008 financial crisis.

“I do not have a crystal ball. I hope there will not be such a big wave.”

He said demand is weakening at Times Square and Harbour City. “In the short term, we think the outlook is not very optimistic. Of course, this will affect our company’s full-year performance. In the first half, under such weak demand, the situation is not satisfactory.”

Wharf reported an underlying net profit for the first half up 3 per cent to HK$5.18 billion. While that performance was in a period when the trade war was beginning to have an impact, the full effect of ongoing protests against the extradition bill will not be fully visible until the third-quarter results are released. 

Ng also flagged the strengthening of the Hong Kong dollar against the yuan as potentially affecting sales in the second half.

“Currency is a very important factor … As the Hong Kong dollar strengthens, it has a very big impact on Hong Kong’s overall consumption and demand.”

This week, the yuan broke the 7 yuan to US$1 threshold. “This is an even bigger warning.”

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