Influx of mainland tourists 'to boost retail rents'
( 2003-09-18 10:35) (China Daily HK Edition)
The influx of mainland tourists following the relaxation of travelling restrictions on the mainland is expected to boost rents of retail properties in Hong Kong.
The forecast came from Lo Ka-shui, deputy chairman and managing director of Great Eagle Holdings.
"With the influx of mainland tourists and the Closer Economic Partnership Arrangement (CEPA) as catalysts, we can see that rents for retail properties are stabilizing from the substantial fall during the outbreak of SARS," Lo said at a press conference yesterday.
Speaking at the press conference, Lo announced that UA Cinemas became the first anchor tenant of Langham Place, the company's new property project of a large-scale three-in-one commercial complex in Kowloon.
The 1.8 million-square-foot complex comprises a 59-storey Grade-A office tower, a 15-level shopping mall that offers more than 300 shops and restaurants and a 42-storey 5-star hotel with more than 700 hotel rooms.
Besides UA Cinemas, Lo said the company was now targeting for well-known brand names as their anchor tenants, while marketing of the mall would be officially launched after two months.
Lo said the market response was good and the company had already received enquiries on rentals from huge retail groups, mainly from some large restaurant groups, before the marketing was launched.
He said signs of recovery in the office rent and occupancy level had been seen since the peak of the SARS outbreak, which hit severely the already weakened local economy. Property prices fell by an average of 65 per cent from the peak in 1997 and occupancy rates in hotels were seen at as low as 10 per cent during the SARS outbreak.
"There are already some signs of recovery in office rentals, though office rents are still low in general," Lo said.
He was confident about the office rentals at Langham Place because the current market sentiment was good and the local economy had improved following the global trend. Demand for offices will go up because investors will consider business expansion, he said.
"Office rentals at Langham Place should not be a problem for us," Lo said.
He said Mongkok had the lowest office vacancy rate among the districts in Hong Kong and that many trading companies and banks could be found in that area.
According to Lo, however, local tourism has not yet bounced back as most newspaper reported.
"Tourism is not as good as it was reported," Lo said. "It has not yet fully recovered as you can see that arrivals from Japan and the US still remain low compared to the pre-SARS period."
He said that the current occupancy rates at Eaton Hotel and Great Eagle Hotel reached 80 per cent and 70 per cent respectively, while room rates were about 20 per cent lower from a year earlier.
Rooms in the group's hotels are already 30 to 50 per cent booked for the traditional peak season from mid-September to mid-November.
Yet Lo said Hong Kong should have enough rooms for tourists even in the peak season. He opposed the government's proposal of turning the apartments in the House Ownership Scheme into guest hotels because there would be an increase of 30,000 hotel rooms by 2008, plus 10,000 service apartments.
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