Hearing that something between 60 and 70% of Hong Kong hospitality staff are currently on unpaid leave and yet when trying to take advantage of low occupancy by booking a stay-cation in one of the tourist hotels on Kowloon side, where occupancy is said to be in single digit percentages, the prices remain remarkably sticky. Perhaps the hotels prefer to keep the hotels empty and the staff on unpaid leave? This is clearly not sustainable, but demonstrates a classic Hong Kong attitude of shutting down supply to keep prices up. The same applies to property generally, where landlords would rather keep an apartment empty than cut the price, even a little. If the authorities in HK and of course Beijing are serious about addressing the inequality issues then they need to force increases in supply, not just rely on weak demand. Preventing unpaid leave might be an angle here, as would be extending the (already proposed) tax on empty new properties to a wider base.
Meanwhile, I didn’t bother to comment earlier on the news about broker CLSA threatening to leave their Swire Group offices, since it was clearly part of an ongoing negotiation – since confirmed by CLSA themselves. They are staying. The important angle here is that Swire are no more discriminated against than any of the other Property Developers. Indeed, the fact that Swire have a huge new development down at Taikoo, in Quarry Bay district, where prices are half that of central, should actually put them in a better position to benefit from cost cutting initiatives by corporates than some of their competitors.
