The struggling operator of Hong Kong’s first outlet shopping centre near the Shenzhen border wants to quit its business after losing an investment of more than HK$180 million in 18 months.
A sharp fall in Chinese tourist arrivals caused by the ongoing social unrest also served as “the straw that broke the camel’s back”, according to pro-Beijing lawmaker Wong Ting-kwong who is behind the project, San Tin Shopping City, also called The Boxes.
“I think it is a timing mismatch for us,” he said. “We have invested about HK$180 million in this project and incurred losses of more than HK$1 million per month. We haven’t collected a single penny as rent since the beginning. We really can’t keep it up anymore,” he said.
Wong, who represents the import and export sector, said the mall operator, Well Operation, had been in talks with the site owners – a joint venture between Sun Hung Kai Properties and Henderson Land Development – about surrendering the plot. Wong is a member of the San Tin Shopping City Foundation, the parent company of Well Operation.
“We have been in talks with the owner about our wish of surrendering the site. We hope the two firms – Sun Hung Kai and Henderson – will take it over for further development with their extensive networks and expertise. I am sure they can make the place shine again,” he said.
Wong said since they were not bound by any contracts with the mall’s tenants, it would be up to the site owner to decide the type of the new arrangement with the tenants. He said only 27 of some 214 shops had signed tenancy agreements with them.
The 420,000 sq ft plot of the shopping complex has been leased to the operator at a nominal fee of HK$1.
The complex was planned to serve as an outlet mall with a dining area, fairs, and attractions, such as game booths. In 2015, Wong came up with the idea to capitalise on an influx of mainland traders who came to Hong Kong to buy baby milk powder, cosmetics and other necessities, to sell the items for a profit across the border.
However, the project, built to resemble a collection of individual containers, was plagued by repeated delays that spanned more than two years because of technical challenges posed by its design.
Since its launch in February last year, the mall’s business has been stagnant as Hong Kong’s growing anti-China sentiments resulted in fewer mainland visitors coming to the city.
The anti-government protests since early June have further dampened visitor arrivals. In the third quarter of this year, the number of visitors to Hong Kong plunged by 26 per cent from a year earlier to 11.9 million, which was the sharpest year-on-year fall in tourist arrivals since the second quarter of 2003. The fall in visitor arrivals reached about 40 per cent in October alone.
On Thursday, about 90 per cent of the shops were closed at The Boxes, apart from some restaurants and a handful of clothing shops. Dozens of local residents were seen having lunch or hanging around in the dining area.
“There are quite a lot of people dining here, especially at night. Some local residents love to dine here at night as the area is spacious and quiet, and also drivers do not need to worry about parking,” Tobut Chan, 32, a chef at a restaurant, said.
A salesperson at a clothing shop who refused to give her name, said the goods at her shop were much cheaper than those in other urban areas in the city, which ensured a steady stream of customers visiting her shop every day. “Some local residents like to buy cheap goods here,” she said.