Hong Kong developers worry as travel restrictions pummel hotels and malls

Analysts and industry experts foresee gloomy industry with no signs of borders reopening soon 

According to analysts and industry figures, the outlook for Hong Kong’s major property developers are still dim after the hotel and retail industries took a huge hit last year, reported South China Morning Post.  

The city’s three biggest commercial property landlords unveiled significant profit plunges for 2020 as travel regulations halted visitors from their usual holiday roaming, leading Hong Kong’s economy to a virtual standstill.  

Raymond Kwok Ping-luen, chairman and managing director of Sun Hung Kai Properties, said, “various domestic and external challenges will continue to weigh on the economy of Hong Kong in the short term.”  

The developer owns affluent hotels like the Four Seasons, Ritz Carlton, and the Hyatt Centric Victoria Harbour, including luxury shopping malls like the IFC Mall in Central.  

“Shopping centre business will continue to be affected until the travel restrictions with the mainland are removed… hotel business is likely to remain tough as long as cross-border global travel is restricted,” said Kwok.  

Hong Kong has closed down its borders to tourists since last year to contain the pandemic, in which such restrictions are likely to continue for the time being.  

Irene Lee Yun-lien who chairs Hysan Development, said, “as we enter the second month of 2021, we still have little clarity on our future.”  

As stated by the Tourism Board, visitor arrivals in Hong Kong dropped by almost 94 percent last year to 3.57 million, a 36-year low. As a result, retail sales plummeted by 24.3 percent from the previous year, the lowest for the sector since records began in 2004.  

“The developers are clearly not optimistic. They won’t get out of the tunnel until the city’s economy has really recovered,” mentioned Alvin Cheung Chi-wai, associate director at Prudential Brokerage.  

However, there is some light at the end of the tunnel via vaccinations in the city and measures designed to uplift the economy and consumption.  

For the first time, Hong Kong will offer citizens HKD5,000 (USD644) in digital vouchers to motivate domestic spending as part of plans revealed in the latest budget.  

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“There is still a lot of uncertainty for the developers. Their hotel business will be quite challenging in particular,” said Raymond Cheng, managing director at CGS-CIMB Securities. “The city’s retail for sure will be better this year with the coming government coupons and easing for social distance measures. But until the cross-border restrictions are lifted, we cannot see a full recovery.”  

Sino Land, another major developer, is hoping for recovery from further integration with mainland China, the only major economy to experience positive growth in 2020.  

“[China’s] new five-year plan supports further integration of Hong Kong with the development of the country… allowing the city to leverage China’s economic growth and to support a stable economic environment for Hong Kong,” added Robert Ng Chee Siong, chairman at Sino Land.