Times Square, Harbour City parent Wharf calls Hong Kong economy ‘dire’
Hong Kong retail landlords will face pressure to reduce rental rates throughout the year as leases come up for renewal, says Wharf Real Estate Investment Company chairman and MD Stephen Ng.
Speaking during a media briefing on the company’s results yesterday, Ng described Hong Kong’s economy as “pathetic” and its outlook as “dire” due to the impact of last year’s protest activities and now the coronavirus, which have decimated inbound tourist numbers.
“No landlord can successfully keep the same rents when the market is so dire,” he said, in comments translated by the South China Morning Post.
Wharf, which owns the premium shopping malls Times Square and Harbour City, posted a decline in underlying profit of a modest 3 per cent to US$1.3 billion for last year. But analysts expect far worse figures this year as the company has to offer rent relief to retailers whose turnover has plummeted and significant operating losses on its hotel properties where vacancy rates have dropped to as little as 5 per cent.
Tenants of Harbour City shopping centre recorded an average 23-per-cent drop in retail sales last year, with those at Times Square slightly better off, suffering a decline of 19 per cent. But those figures include the first half of last year when retail sales were showing year-on-year growth from 2018.
Ng said it could take as long as nine months for the coronavirus outbreak to ease and the territory’s economy to recover. But he said the company had ongoing confidence in Hong Kong’s ability to recover
Meanwhile, Wharf’s profit attributable to shareholders fell by 78 per cent due to an asset revaluation which resulted in a $733.5 million deficit.
Group revenue fell 3 per cent to Wharf’s group revenue dropped 3 per cent year on year to $2.06 billion.