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Hong Kong retailers' profits to rebound on lower rents: analyst
Rents have been falling over the past two years.
Maybank Kim Eng analysts reiterate the view that lower rents will be the key driver for HK retailers this year. Rents have been falling over the past two years, but these have not been fully reflected in the P&Ls of retailers.
"This is because tenants are normally locked into leases with a three-year term. From the retailer’s view, they only renew about a third of the agreements. As such, retail sales deteriorated much faster than the rent adjustment the past two years. But stabilizing sales along with falling rents should help improve their profitability this year."
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