- Hang Lung chief executive Weber Lo said the mass rallies had damaged sales of its tenants in Fashion Walk, while Knight Frank predicted rents for high-street shops will fall by up to 10 per cent in 2019
Hong Kong's retail sector has been hit by weeks of protests that have frequently descended into violence, according to Hang Lung Properties, a major landlord in one of the city's best known shopping areas.
The company's chief executive Weber Lo said the mass rallies had damaged sales of its tenants in Fashion Walk, Causeway Bay, while Knight Frank predicted rents for high-street shops will fall by up to 10 per cent in 2019.
"(In light of) the recent confrontations, as Hongkongers we of course feel a little uneasy," Lo said. "Recently when we communicated with some of our tenants, we know that during the days when incidents occur, there is a certain impact on their retail sales.
"We hope order and peace can be restored soon and try to minimise the impact."
Lo declined to specify the extent of the impact, but said one or two tenants in busy areas had to close their doors when the rallies spilled into Causeway Bay.
"We hope order and peace can be restored soon and try to minimise the impact."
He was speaking after the company reported a 4 per cent decline in underlying first-half profit to HK$2.23 billion (US$285.06 million), while revenue fell 18 per cent to HK$4.2 billion.
Hang Lung saw 3 per cent growth in revenue from property leasing in Hong Kong in the first half, unchanged from a year earlier. The massive protests that have shaken Hong Kong began in early June so are unlikely to be fully reflected on paper until later in the year.
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"Undeniably, Hong Kong's retail business and a lot of related industries, such as tourism, will definitely be affected (by the political crisis)," said Ronnie Chan, Hang Lung's chairman. "It is difficult to say whether the 3 per cent can be maintained. We do not have a crystal ball."
Hong Kong's retail sales had been falling since February, dropping 1.3 per cent by value in May from a year ago, according to the Census and Statistics Department. In particular, sales of clothing and footwear plunged 15.5 per cent in the second quarter from the previous three months.
"Deteriorating luxury retail sales have made the recovery of the retail leasing market more challenging, especially for prime street shops," said David Ji, head of research and consultancy, Greater China, at Knight Frank. "Retail business performance is expected to remain weak amid external economic uncertainties and local political upheaval.
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"We expect rents for prime street shops to decrease 5 to 10 per cent in 2019, while rents for shopping malls should remain relatively stable."
Hang Lung said its fall in profit was mainly down to a lack of home sales in Hong Kong and China.
The company, which also has eight shopping centres in China, was cautiously optimistic, as "the US-China trade dispute shows no sign of abating", Chan said in a filing to the Hong Kong Stock Exchange.
They will pay an interim dividend 17 HK cents per share, unchanged from last year.
The company's share price rose 1 per cent to HK$18.64 on Tuesday.
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