State-owned landlords cancel rents for up to six months to help small firms
State-owned commercial landlords in Shanghai will exempt tenants from rents for up to six months, handing a financial lifeline to businesses crushed by more than a month of lockdown.
Lujiazui Group, a developer of shopping centres and offices in Pudong district, has offered to waive six months of rents for clients, while the city’s investment arm Shanghai Land (Group) said it would forgo three months of payments for small-business owners and double for those who incurred losses in the shutdown.
Shanghai Tower, the mainland’s tallest skyscraper located in the Lujiazui finance and trade zone, was assessing the status of its tenants before drawing up a detailed relief plan to mitigate their financial burden, the property owner said yesterday.
The support follows a clarion call by the central government and city authorities to rescue embattled small businesses and save jobs in the financial hub.
“Thousands of small firms are on the verge of collapse due to the antivirus measures and the relief package could be a cure for many restaurants, groceries and teahouses,” said Eric Han, senior manager at business advisory firm Suolei in Shanghai. “The ultimate goal is to encourage the battered small firms to keep their employees, hence ensure economic and social stability.”
Some 80,000 small firms in Shanghai would be exempted from paying rent worth a combined 10 billion yuan (HK$11.78 billion) to state-owned landlords, Bai Tinghui, chief of the Shanghai State-owned Assets Supervision and Administration Commission, estimated last month.
The central bank yesterday also urged local lenders to grant easy credit to Shanghai manufacturers as more of them prepare to resume operations. Some companies hit hard by pandemic curbs would be allowed to delay loan repayment to the end of this year to ease their cash flow crisis, a senior city official said.
The relief for small businesses, defined as those paying less than 300,000 yuan in annual taxes, has exceeded the incentives offered by the local municipality in late March at the start of a two-phase lockdown when it cordoned off Pudong on the east side of Huangpu River.
Shanghai is the main gateway for foreign businesses and capital to the mainland market and the local government has yet to unveil a time frame for lifting the lockdown.
“We need to pay employees and bear the loss of the food stockpiled earlier,” said Sherlock Wang, a restaurant owner in Pudong, adding the six-month break might not be enough to save his business from collapsing. “The worst is yet to come. We just expect to minimise losses and keep our fingers crossed that the pandemic will be contained soon.”
The local government and state-owned developers were working on plans to support retail, manufacturing and service companies, said Joseph Wang, head of office leasing advisory division in Pudong at JLL. Some tailor-made plans would be offered to individual tenants because of the complexity involved, he added.
The pandemic in Shanghai could weaken demand by foreign investors for office space and commercial properties because of low occupancy ratio, JLL said.
Private developers would also offer free rent to support tenants because “they have reasons to expect an economic recovery and higher rent rates in 2022 and 2023 when all businesses return to normalcy”, he added.