Hong Kong property enquiries up in street retail sector on stability hopes

HONG KONG (Reuters) - Hong Kong’s street-level shops are seeing a surge of bargain buying and leasing interest in a sign that some believe the worst may be over for the protest-hit city, although as yet the enquiries had not sparked an increase in deals.

The territory’s two major realtors specialising in the sector said the increased activity has followed Beijing’s move to impose national security legislation on the basis that while politically divisive, the new laws might bring stability.

“For businesses, peace is very important; they think the law is positive to the business environment ... there won’t be tear gas and breaking shop windows any more,” said Daniel Wong, the chief executive of realtor Midland IC&I.

Many retailers were forced to close in the past year as anti-government demonstrations and, in recent months the coronavirus pandemic, disrupted business. Retail sales plunged 36.6% in April from a year earlier.

The new law aims to curb sedition, secession and terrorism and retailers hope it will bring more than a year of protests to an end.

Still, the law has prompted concern over freedoms in the semi-autonomous city and alarmed some in the financial and diplomatic communities. Authorities say it will target a minority of “troublemakers”.

Wong said enquiries for buying and leasing street-level shops have increased at least 50% in the three weeks since the legislation was proposed.

“They think the worst is over and prices should have bottomed; now it’s time for bargain hunting,” he said, noting his company is managing deals worth over HK$100 million ($12.90 million).

Dennis Cheng, senior sales director at property agency Ricacorp, said enquiries to buy are up 40%, while calls from those looking to rent are up 50%.

“It’s turned around from a buyer/tenant market. Now the market is more balanced,” he said.

However, the bargain hunting had not yet boosted the number of deals, they said, because sellers and buyers are still too far apart in their price expectations.

“Some sellers decided not to sell any more after potential buyers offered very low prices,” Cheng said.

“They think where shall they put the money after selling the shop? There’s monetary easing globally now and it’s better to keep brick and mortar.”

Property activity in shopping malls has not picked up as quickly and the office sector is stalled as businesses and investors wait to see how the security law impacts the global financial hub.

Reporting by Clare Jim; Editing by Neil Fullick