LANDLORDS in Hong Kong, a city with some of the highest commercial rents in the world, are staring down the barrel of a tough year.

Protests that started in mid-2019 have taken their toll on shop and office owners. Large-scale protests in popular shopping districts and a slump in tourists have made it increasingly difficult for retailers.

According to the Hong Kong Retail Management Association, more than 5,600 jobs could be lost and thousands of stores may shut over the coming six months. That’s already impacted the value of retail-leasing transactions, which dropped 26 percent in the second half versus the same period of 2018, data from Centaline Property Agency Ltd. show.

“Retailers have become very cautious,” said Marcos Chan, head of research for Hong Kong at CBRE Group Inc. “There won’t be many expansions in the coming year.”

International brands have been scaling back their operations since June. Luxury fashion label Prada SpA decided not to renew its largest store in the Causeway Bay area in August, the South China Morning Post reported earlier this week. The landlord later slashed the rent by 44 percent to entice tenants.

Folli Follie, a brand of Greek firm FF Group, closed one of its shops in Central in December ahead of the lease’s expiration and the asking price has since been chopped by 40 percent. LVMH, the world’s largest luxury conglomerate, plans to close a Times Square mall store in Causeway Bay after its request for lower rent was refused.

A slump in shop rents could threaten the city’s status as the world’s priciest retail-rental market, analysts say.

(SD-Agencies)