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ACCESS OFF-MARKET RENTALS THROUGH OUR PROPRIETARY TENANTS NETWORK.
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"We regularly work with SAVVI to understand new trends and market demand / opportunities on behalf of our clients within the consumer and retail segments for Hong Kong.
— Consulting Firm, Management Consultant
"Our development is strata-titled, with quite a mixture of brand covenant within the portfolio. In working with Savvi, we consistently receive vetted and qualified tenants based on our target market."
— Galleria, Landlord
"There are plenty of market opportunities, across multiple channels. By working with SAVVI as a single point of call, we have full market coverage and access to the market."
— Retail Brand, Brand Manager
Generally, a standard lease term is two to three years subject to rent review at the end of every third year at open market rent (OMR). If the parties cannot agree on OMR, an independent expert valuer or arbitrator determines it as defined in the Tenancy Agreement.
Larger tenants can often secure an option to renew at expiry of the lease on the original lease term. Conditions such as serving of notice and method of assessment of the rental are often stated in the Tenancy Agreement. Typically, rent is determined by OMR at lease renewal.
Rent is payable monthly in advance. Rents are quoted in Hong Kong dollars (HK$) per square foot, per month and are calculated with reference to the leased area as defined by the landlord.
An incentive offered by the landlord to the tenant as an allowance for the fitting-out of the premises. The length of the rent free period depends on the size of the premises and the prevailing market conditions. During tight market conditions, free rent offered may range from one to three months. During weak market conditions, some landlords offer four free months or more, depending on the tenant, the length of the lease term, the size of the space leased and the rental rate.
Rent payable by the tenant is calculated either wholly, or partly, by the actual turnover achieved by the tenants’ business operated out of the premises. Typically found in most shopping malls and some high street locations. Percentage amount may vary based on the type of tenant (i.e. F & B, fashion, jewelry etc.).
A monthly charge payable to the landlord or management company for the upkeep and security of the building and its common areas. Payable monthly in advance and based on the leased area. Management charges generally include air conditioning, building security, lift maintenance and common area cleaning (Subject to revision by management company). The fee is quoted on per square foot per month and is non-negotiable and may be revised from time to time.
This is normally equivalent to two to three months rent which the landlord will hold without interest throughout the lease term. This deposit is refundable and will be returned to the tenant at the expiration of the Tenancy Agreement provided that all the terms of the lease have been compiled with and all utility bills are fully settled.
Government rates and rent are payable quarterly in advance and are calculated at 5% and 3% of the rateable value of the property respectively. Government rent and rates are usually borne by the landlord, but some landlords may look to pass this cost on to the tenant.
This is shared equally between the Landlord and Tenant and is paid to the Government of the Hong Kong Special Administrative Region for the stamping of the Lease Agreement after it is signed. The duty on a lease must be paid within 30 days of its execution, failing which the contractual parties are liable to a penalty for lateness. If the stamping is more than two months late, the penalty is ten times the amount of duty, though the collector has power to remit some or the entire penalty. Your agent, landlord, solicitor or yourself will need to present the signed tenancy agreement for stamping. The duty incurred will be shared equally between you and your landlord. A separate cheque should be made payable for the duty to 'The Government of HKSAR.
At the commencement of 2014 the following Stamp Duty rates apply and are payable upon execution of the lease:
0.25% of the average annual rent / lease term 1 year or less
0.5% of the average annual rent / lease term 1-3 years
1% of the average annual rent / lease term of 3+ years
Electricity and telephone charges are separately metered and paid directly by the tenant to the utility company. The electricity charge is usually based on a meter, and is typically HKD 1.00–1.20 per square foot per month for an office tenant. Water rates are charged to the landlord and passed onto the tenant.
The tenant pays for electricity, water, and gas used in the premises, usually directly to the utility company. The electricity charge is usually based on a meter, and is typically HKD 1.00–1.20 per square foot per month for an office tenant. Tenants usually pay for water based on a meter, although some pay a fixed license fee or pay for water in the management fee.
The tenant may consider sufficient insurance coverage to protect themselves against third party liabilities.
Car parking spaces tend to be scarce. Where spaces are available these will normally be allocated on the basis of a monthly license agreement for a separate charge. The number of car parking spaces allocated is usually in proportion to the size of the premises leased.
For tenancy agreements entered before 9th July 2004, a landlord was in most cases bound to renew a tenancy for a domestic property with an existing tenant under the law. However, the law has changed. Tenancy agreements entered after such date no longer offers any statutory right of renewal in favor of a tenant. A tenant could only ‘renew’ his tenancy either through negotiation or contractually exercising an ‘option to renew’ under a tenancy agreement (if so provided). Where an option to renew is provided, it is typically determined by OMR.
An ‘option to renew’ clause in the contract usually requires the tenant to give a written notice to the landlord not later than a date specified in the contract. The clause may also contain reference to the terms of the new tenancy document, such as on the same terms as the existing tenancy or a slight increase in payable rent over the renewed term of tenancy.
Sub-letting rights are prohibited under most agreements and where they are permissible, are subject to approval by the landlord. Similarly, assignment of the lease and early termination are usually non-negotiable. Subject to approval by Landlord, replacing a tenant can be done by Assignment. The outgoing tenant will need permission and co-operation of the landlord and should expect to pay the landlord's share of the agency fee, legal costs and stamp duty payable.
Tenancy agreements generally do not allow tenants any rights to terminate the lease during the term of tenancy. To provide for the premature termination of the lease contract with tenants during the term of tenancy, landlords may attach special clauses stating that tenants will be responsible for any costs with respect to renovation or redevelopment. In rare cases, the tenant may be able to terminate the lease early through one of two ways:
Through negotiation and mutual written agreement to surrender by compensation, usually the full remaining amount owed.
Through introduction of replacement tenant to take up a new lease with terms and conditions agreeable to the landlord (usually at a higher or equal face rental).
In either case, the outgoing tenant will need the written permission and co-operation of the landlord and should expect to pay the landlord's share of the agency fee, legal costs and stamp duty payable.
When a landlord intends to sell a property that is let to a tenant, the landlord should make it clear to the estate agent, the solicitors and the potential purchaser that the property will be sold subject to a tenancy (instead of delivering up “vacant possession”).
The landlord shall also state clearly in the sale and purchase agreement (or preliminary agreement) about the apportionment of rent (including unpaid rent as receivable from the tenant) before completion of the sale. The landlord should also notify the tenant about the intended sale and properly, the identity/contact method of the purchaser and the payment method (e.g. bank account of the purchaser) and deal with the deposit paid by the tenant.
The tenant is required to hand the premises back to the landlord at the expiration of the term, in a state consistent with the due performance of the Tenant's obligations under the Tenancy Agreement. The Tenant's obligations typically are handover in good clean and tenantable condition and repair (fair wear and tear excepted).
Generally, a tenant is under no obligation to ‘improve’ the property into a better state than what was given to him at the commencement of the tenancy. It is also expected that the property may suffer from fair wear and tear as result of aging and normal use in which the landlord may have to reasonably accept at the time of handover.
For renovations carried out by the tenant within the property, it is a more complicated matter as to whether the landlord would be willing to accept delivery up of the property with such state given that renovations are often a matter of personal preference.
In practice, to avoid unnecessary disputes, it is often desirable for both parties to sign on a written acknowledgement about the state of handover of the property after inspection.
Capital contributions for fit-outs are generally not open for negotiation.
A large proportion of the overall residential market in Hong Kong are held by way of a “strata-title” where individuals own residential units in a building. The rights and responsibilities of property owners and overall property stewardship are outlined within the Deed of Mutual Covenant.
The communal areas of the property (including the exterior of the building) are usually managed by an external management company. The process of acquiring space in a strata-title property is no different to any other residential property.
Typically held by private investors, institutions or larger organisations, often owning clusters of buildings including a mixture of retail and commercial. Commonly, developers have been involved in the development of the property or scheme and take responsibility for building management in-house. The owners will frequently employ the services of a third party specialist to take care of the day-to-day running of the property.
Possession of the premises is normally provided in “bare shell” condition. Costs associated with fitting out the space will be borne by the tenant.
Tenants normally pay for all tenant improvements, except that the landlord normally delivers the space with suspended ceilings, ceiling lighting and restrooms (landlord’s standard handover condition).
Consent for alterations to the shop interior and exterior must be secured from the landlord. For alterations relating to ventilation, air-conditioning, major electrical work or works that have fire safety implications, the use of the landlord's nominated contractors is required. For all other alterations, usually the tenant can nominate their own contractors. The tenant must fit out the premises according to plans and specifications as approved in writing by the landlord. Most landlords charge the tenant a vetting fee for reviewing and obtaining approval for the tenant’s plans.
Fit-out costs are typically quoted and assessed on the net square footage of the space and can range from HKD 600–1500 per square foot, including construction, furniture, wiring, design fees, etc.
Ranges shown below include design and engineering fees but exclude furniture and audio/visual:
Average: HKD 400–600 per square foot net (basic specifications).
Enhanced: HKD 600 – 1,250 per square foot net.
High-End: HKD 1,250 – 2,500 per square foot net.
Luxury: Some luxury retailers spend over HKD 3,000 per square foot net on renovation.
The lease agreement generally requires tenants to restore the property to its original handover condition, before the expiration of the tenancy at their own cost.
Each party will bear their own legal costs in the negotiation and execution of the lease and any further documentation required. Typically, the landlord’s solicitors prepare the lease agreement using fairly standard terms and conditions.
A standard tenancy agreement is common, and landlords are generally reluctant to accept major changes. Major landlords usually have their own standard tenancy agreements, which include some landlord-specific terms.
If the tenant enters into a commitment with a new landlord, that landlord will pay the agent a fee; which is normally half of one months new rent.
The landlord usually pays 1 month rent to the agent who introduces a tenant to the landlord (subject to the market condition).
The tenant pays the fee to the broker representing the tenant. The normal standard rate is a portion of one month or a percentage of savings over the new lease term based on the landlord’s initial quote.
Sale and Purchase:
Usually the buyer pays 1% to its broker, and the seller pays 1% to its broker. The fee is negotiable, and influenced by market conditions and the total value of the transaction.
Tenants generally should engage a designer to measure the floor area of the leased premises. Floor areas are quoted based on gross area and saleable area (i.e. net area) and rents, service charges and various charges are based on these measurements. Tenants should understand the difference between them in order to compare the true cost on actual useable space of the premises.
According to traditional Chinese custom, the advice of a feng shui expert is sought when moving to a new house or office or retail shop. The expert advises on the suitability of the new location for the individual or business. Feng shui experts also advise tenants as to how to improve the living or working environment.