SMEs negotiating rent with landlords amid pandemic crisis
Several small and medium enterprises (SMEs) have to face the pressure of landlords not decreasing their rent while operations of their business are restricted, according to a real estate developer.
After careful calculations, some stores can only choose to close their business.
Although currently, restaurants are allowed to operate by only providing takeaway services, they must still calculate profit or loss after deducting rent and operating costs.
“These cases are special examples in such a subdued economic environment,” Bridge Real Estate operations manager Angel Loi said, as cited in an Exmoo report.
Loi considered that most landlords will be considerate of tenant’s situations as the economic viability of tenants is limited during the pandemic. The landlords will generally agree to reduce the rent after discussions with the tenants to tide over the difficulties.
However Loi said that most landlords will not reduce their rent, but some can accept negotiation of the rent. “But there are store owners who decide to change the size of the store from big to small,” she added.
Meanwhile, Loi said that the rent of residential buildings has been reduced. Taking one example where the monthly rent was over MOP 20,000 before the pandemic, now the rent has been reduced to MOP 13,000, a drop of nearly half the previous rent.
“The income of the store can only rely on the takeaway platform and this is only half of that before the pandemic, which makes it very hard to operate,” a beverage shop manager, surnamed Ma, said.
Ma estimated that her store will have to close within two months, but she also will discuss the reduction of the store’s rent with the landlord. She said that, frankly, a domino effect will most likely occur for the SMEs with the continued pandemic, with an expected wave of closures over this period.
Meanwhile, a sector representative said that although several stores that are allowed to resume operations have reopened after the partial lockdown, their customers are not plenty.
“The most prosperous area (Ruins of St. Paul) in the past is now gradually declining,” the president of the Industry and Commerce Federation of Macau Central and Southern District, Lei Cheok Kuan said.
Previously, Lei suggested that the government distribute MOP15,000 to residents across three months in a bid to help sustain local businesses.
According to him, two-thirds of local SMEs are already considering ceasing operation because of the pressure they face, meaning the government must act swiftly.
Thus, the suggested that the first two MOP15,000 can be given in cash, while the remaining stimulus could be handed out in a form of e-vouchers as a way to support the SMEs due to near-bankruptcy of these firms. Staff reporter
