Market performance was mixed across the region during SARS. Areas that recorded higher cases of the illness including Hong Kong and Singapore were more impacted by the temporary slowdown in activity as locals avoided public places and tourist numbers declined.
In the current environment, infection control measures have caused retail turnover in Mainland China during the Spring Festival Golden Week to fall sharply short of expectations. Several landlords have decided to shorten malls’ opening hours, cancel promotional activities and shut down operations of potentially crowded spaces. That said, many fashion retail and F&B brands are putting more efforts on home delivery services to compensate for losses from their physical stores. This situation adds to an already difficult operating climate.
With high social tensions being an unfavourable backdrop in Hong Kong, coupling with the unfortunate timing of this outbreak during the Chinese New Year, it is another heavy blow to the frail retail sector. Despite the perceived temporary nature of the outbreak, it may prompt earlier closures of weaker trades or outlets. In turn, more owners are likely to be forced to compete for tenants, exacerbating the rental down trend.
Travel restrictions are likely to weigh on many retail markets as long as they remain in effect. Japan’s prime retail market may be one of these places impacted, as consumption of luxury goods at department stores would likely slow if tourist arrivals dips. Although, spending by overseas tourists is still a relatively small component of total national retail sales.