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Following is a question by the Hon Leung Yiu-chung and an oral reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (February 7):
Question:
From time to time, there have been reports that the Link Management Limited ("the Link") has substantially increased the rent of the shops in the shopping malls of public rental housing ("PRH") estates unilaterally without prior discussion with the commercial tenants concerned, or has refused to enter into new tenancy agreements with commercial tenants upon the expiry of their current tenancy. Many shops, including Chinese restaurants, have closed down so far, resulting in unemployment of the workers concerned. This practice of the Link is entirely different from that of the Housing Authority in the past. In this connection, will the Government inform this Council whether it has assessed:
(a) the adverse effect of the aforesaid practice of the Link on the job market; if it has, of the assessment results; if not, the reasons for that, and whether assessment will be made;
(b) the amount of additional consumption spending by PRH tenants as a result of the increase in the prices of goods and services sold at the shops concerned due to rent increase, and if the shopping malls of PRH estates can still provide PRH tenants with essential goods and services following the closing down of shops one after another; if it has, of the assessment results; if not, the reasons for that, and whether assessment will be made; and
(c) if the closing down of numerous shops will have any adverse effect on the local economy; if the assessment result is in the affirmative, of the measures to address the situation; if the assessment result is in the negative, the justifications for that?
Reply:
Madam President,
Upon the public listing of The Link Real Estate Investment Trust on November 25, 2005, the Link Management Limited (the Link) has become a private entity which determines its own day-to-day management, strategies and mode of business as well as direction of operation, entirely independent of the Government and the Housing Authority (HA). Nevertheless, the Link's operations must comply with the prevailing legislation, conditions of government leases, and terms of covenants and agreements made between the Link and the HA.
As regards the increase in shop rental level and the renewal of tenancies with individual shops, the average rental adjustment for properties under the Link upon renewal of tenancy between April and September 2006 was 8.3%, according to the Link's Interim Report for 2006-07. This is relatively moderate when compared with the average adjustment rate of 23.4% for other private commercial premises for retail use during the same period according to the statistics of the Rating and Valuation Department.
My reply to the three-part question is as follows:
(a) The Government would not specially assess the impact of the day to day operation of a particular private organisation on the labour market. Nevertheless, according to the public information released by the Link, when shops close down or move out as a result of rental increase, the Link can always find new tenants within a short period, which in turn brings new employment opportunities. Judging from this angle, the change of tenants does not have much impact on the employment market. Moreover, during the period between April and September 2006, the Link let out an additional floor space of 150 000 square feet, most of which had been left vacant for a long time in the past, and as a result created 800 jobs.
(b) The government would not specially assess the impact of the rental increases of individual shops on the consumption of the public rental housing (PRH) tenants.
We believe that the Link, as the operator of the PRH shopping malls, would take effective measures to increase the customer flow in shopping malls and formulate an appropriate trade mix, with reference to market conditions as well as the needs and spending power of the PRH tenants, so as to enhance the provision of necessary services to them.
(c) We would not assess the impact of the changes of tenants of individual shops on the overall economy of Hong Kong. Hong Kong is a mature economy. Its overall economy is not expected to be affected by such changes. In fact, the overall letting situations of the shopping malls under the Link have improved. For example, the letting rate rose from 91% in the first quarter last year to 92.3% in the third quarter. The number of shops has also increased, bringing more shopping choices to residents and more employment opportunities to the local communities.
Ends/Wednesday, February 7, 2007
Issued at HKT 13:48
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