|With rents coming down maybe entrepreneurialism will thrive again|
This past "golden week" holiday resulted in disappointing sales, which has caused tenants to ask landlords for a break in rent.
Sales of jewellery, watches and expensive gifts -- typically the most popular items mainlanders buy in Hong Kong -- fell 3.4 percent in value in August compared to last year.
The decline was the sharpest of all retail items and this was the first drop in retail since July 2009.
"Spending by mainland visitors is lower due to the weak mainland economy and also a change in their shopping habits," said Joe Lin, senior director of retail services at property consultancy CBRE.
The decline in the amount and value that mainland shoppers bought has forced retailers to bring their projected sales down to earth and also landlords to rethink the exorbitant rents.
"I think we will now see a return to more realistic rentals," Lin said.
"For example, a landlord who wanted HK$6 million a month for his shop cut it to HK$4.8 million because of a lack of interest," he said. "Now it is on the market at HK$4.5 million -- but even that is higher than going rents in the area of about HK$3 million."
Simon Lo Wing-fai, director of the research and advisory department at Colliers International said retailers were no longer willing to pay premium rents as they had to cut budgets.
Hong Kong may also be losing its lustre as the number one place for mainlanders to shop.
"Many mainlanders like to follow a trend," he added. "Previously, there was a trend to go shopping in Hong Kong, which was seen as a status symbol. Now mainlanders have more choice and the latest trend is to go shopping in Europe or Korea."
And while Hong Kong has depended on the tourism industry to bring in dollars, not much of it actually benefits the local economy. While local landlords collect rent, the vast majority of the money goes to foreign brands -- and the remaining amount is for the low staff wages.
So in the end tourism doesn't really benefit our economy. Hong Kong really needs to think of other creative ideas to stimulate the city's growth.
But because rents are so high, entrepreneurialism is too high of a risk here and so everyone ends up investing in property and stocks.
How is that sustainable?
Hopefully retail rents will fall back to levels where budding entrepreneurs can take a chance again because it's sad seeing mom-and-pop shops fast disappearing.
We need new local businesses to replace them otherwise Hong Kong will not be a city for us but for tourists who may or may not come here anymore.