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LCQ12: Shop tenants operating in shopping malls under The Link

     Following is a question by the Hon Lau Kong-wah and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (March 21):


     It has been reported that since The Link Management Limited (The Link) took over the management of the shopping malls under the Hong Kong Housing Authority (HA) in 2005, the shop rents have been on the increase.  Quite a number of shop tenants were forced to close their businesses or move because they could not withstand the pressure of rental increase, and even HA's estate offices which used to rent premises in The Link's shopping malls had to move elsewhere as a result of the exorbitant rents.  In this connection, will the Government inform this Council whether it knows:

(a) the overall rate of rental increases imposed on the shop tenants operating in the shopping malls under The Link last year, together with a breakdown by type of tenant; the details of the shop tenants paying the highest rate of rental increase, and the justification for such an increase;

(b) the respective numbers and types of shop tenants operating in the shopping malls under The Link which had closed down or moved because rental increases were imposed on them upon renewal of leases in each of the past three years; if The Link does not have any statistics in this respect, the reasons for that; and

(c) given that the shopping malls under The Link are mainly located in public housing estates where the grassroots reside and the businesses operated by the shop tenants there are mostly related to people's daily necessities and the rental increases imposed by The Link will directly add to the operating costs of its shop tenants, the measures put in place by the Government to safeguard the livelihood of the grassroots from being affected by the rising goods prices resulting from the rental increases imposed on the shop tenants?



     The Hong Kong Housing Authority (HA) divested its 180 commercial and car-parking facilities through the listing of The Link Real Estate Investment Trust (The Link REIT) in November 2005.  The Link REIT is a private entity which is entirely independent of the Government and the HA, and the management of its properties is solely the responsibility of The Link Management Limited (LML).  The Government and the HA cannot and will not intervene in the daily operation and business management of the LML.

     Before responding to the Member's question, I need to clarify that there is no relationship between the arrangement of relocating estate offices from The Link REIT's properties to other places by the Housing Department (HD) and the rental adjustment of The Link REIT on its commercial facilities.  Under normal circumstances, the HD will set up estates offices within the respective public housing estates to facilitate management.  Hence, when there are venues within the HA's properties in public housing estates that are suitable for use as estate offices, the HD will relocate the respective estate offices from The Link REIT's properties to these venues accordingly.

     For the first two parts of the question, they relate to the rental information of the shopping centres managed by the LML.  As mentioned above, The Link REIT is a private entity, and it is entirely independent of the Government and the HA.  The daily operation and management of the properties of The Link REIT is taken up by the LML, neither the Government nor the HA has any involvement.  Hence, the Government and the HA do not have any information as requested in the question.  However, in view of the Member's concern, we have related the first two parts of the question to the LML and it has provided the following for Member's information.

(a) and (b) According to the information provided by the LML (as of the first six months of the financial year of 2011-12), rental increase for The Link REIT's properties portfolio has averaged at about 7% per annum, while overall occupancy rate is about 92%.  The tenancy renewal rate of The Link REIT's properties portfolio is 79.3%, which is higher than that of 71.4% and 74.1% respectively in the past two financial years.  The LML has indicated that when determining the rental with respective tenants, it would take into account such factors as the location and popularity of the respective shopping centres and the shops, the respective trades and the market rental of similar shops, etc.

     Regarding the third part of the question -

(c) As an independent private entity operating on commercial principles, like other private entities, the LML indicated that they will have to make appropriate response to the economic and market situation in order to maintain its viability in the market.  Given the fact that most of The Link REIT's commercial facilities are located in public housing estates and its clientele is mainly public housing residents, the commercial facilities of The Link REIT are therefore required to cater for residents' needs and affordability.  The management of the LML had indicated previously at the Legislative Council that they understood The Link REIT would need to serve the residents of public housing estates.  Hence, when determining the rental, they would take into account the business performance of the retailers and the market trend so as to try to maintain the rental at an affordable level.  Moreover, they would consider the circumstances of individual cases.  The LML indicated that they will maintain its dialogue with shop tenants and public housing residents, and will provide the residents with the services that can cater for their needs.  

     We will also continue to reflect to the LML the views and concerns that we receive from members of the public, public housing residents and retailers, and will encourage the LML to continue to actively communicate with the stakeholders, so as to better understand their views and concerns.

Ends/Wednesday, March 21, 2012
Issued at HKT 11:44


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