Guangdong property owners offer rent cuts amid coronavirus outbreak

Virus-stricken cities in Guangdong are reducing rents for the private sector, in efforts to relieve the burden borne by local enterprises under the suspension of work amid the coronavirus outbreak.

Rents for February and March will be waived in the industrial and technology parks owned by the government-backed companies in the city, said Yu Gang, a senior official at Shenzhen’s State-owned Assets Supervision and Administration Commission, as quoted by on Tuesday. Other properties owned by the state-owned landlords would also see various fees – including rents, management fees and parking fees – slashed, which would add up to a total reduction of 900 million yuan over the two months.

The city is also encouraging private landlords to cut down rents borne by business operators. Authorities in Shenzhen’s multiple districts, including Futian, Luohu, Nanshan, Bao’an and Longhua, have separately suggested local office building owners slash rents during the temporary halt of business operations. In a statement released by Shenzhen Real Estate Intermediary Association, the organisation with over 800 member agencies also called on landlords to lower the rents for various business entities, citing the costs brought by the delay in getting back to work.

A number of big names in Shenzhen’s property market have already rolled out rental reduction measures, including Ping An, Kaisa Group, Kingkey Group, China Resource, Vanke and Longfor Group. Vanke cut by half the rents for February in all of its business projects, covering some 10,000 businesses in southern China, Reuters reported. Longfor halved the rents from Jan 25 and March 31 for over 4,500 brands in the shopping malls it owns in the country. China Resources announced to waive the rents from Jan 25 to Feb 9 for all the stores in its business projects.

In Guangzhou, a joint statement issued by five associations in the city’s catering industry called for an entire rental reduction in February, and reduction by half in March and April. Restaurants account for a large proportion of stores in the city’s shopping malls, which have taken a hit amid the de facto shutdown. 

China Aoyuan Group, a developer headquartered in Guangzhou, offered a 15-day rental cancellation starting from Jan 25, reported Southern Metropolis Daily.

Shopping malls have become a major sector that saw rent cuts amid the outbreak. Wanda and Poly, two major property developers in China, wrote off the rents in 323 and 22 shopping malls for 36 days and 6 days, respectively. 

The efforts came as the two megacities reported the largest numbers of the coronavirus infections outside Hubei province – 291 confirmed cases in Shenzhen and 249 in Guangzhou as of Wednesday – prompting the provincial authorities to suspend the operation of local businesses until Feb 9.

However, this also means the burden will be transferred to the property owners who offered rent reduction to the businesses. Some landlords also felt reluctant to cut rents, citing their own financial difficulties amid the outbreak, as a sub-district in Shenzhen’s Bao’an district suggested a 10-day rent cut for mom-and-pop store owners and migrant workers, National Business Daily reported.

The suggestions from the business associations are non-compulsory, as they represent the joint benefit of the enterprises in the industry, while the individual landlords are not considered a part of them, said Xiao Wen, an analyst at Cric China, a data company specializing in the real estate sector.

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