Tuesday, 22 November 2011

Fact of the Day: Surging Shop Rents

My friend's dessert place in Central is soon to be another casualty of landlords greedy for more rent.

Riquiqui will be winding down next month after two years. The rent was HK$25,000 ($3,209) a month and if she renewed the lease, the rent would be increased another 30 percent which would have make it unfeasible as a strictly evening business. She and her cousin already felt their current rent was out of their budget but decided to bite the bullet and start their fledgling venture.

In the end she didn't make much money, but learned a lot about starting and running a small business.

Tenants moaning about greedy landlords is not uncommon in Hong Kong.

And now anecdotal evidence has become fact. According to a report by CB Richard Ellis on global rents in the third quarter, Hong Kong moved up a spot to become the world's second most expensive shop rents.

The city's rents average $1,685 per square foot per year, right behind New York's Fifth Avenue. Annual rents have risen 52.8 percent in the city this year, and 6.2 percent in the third quarter, while those in the Big Apple only rose 5.6 percent to $1,900 per square foot per year. Sydney is third with $1,224, followed by London and Zurich. Guangzhou is 10th, Beijing 14th and Shanghai 20th.

"Tourist spending continues to be the growth engine of Hong Kong retail sales," says Joe Lin, a director of retail services at CB Richard Ellis.

So thanks to all the mainlanders flooding in Hong Kong to fulfill their shopping urges, we won't see commercial rents going down anytime soon which means we'll be having more shops selling luxury items are they're the only ones who can afford these surging rents that make landlords rub their hands with glee.

1 comment:

  1. the hk government should wake up and start some sort of rent control long ago.