“Right-Sizing” Hong Kong Commercial Leases: Key Issues to Consider in the Context of Business Disruption & COVID-19

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Business disruption seems to have become the new norm in Hong Kong in the last 12 months or so. The first quarter of 2019 was dominated by news of a regional slowdown caused by the US/China Trade War. The second half of the year was characterised by frequent protests on the streets, in the malls and railway stations of Hong Kong. The first quarter of 2020 and no doubt for longer will be impacted by COVID-19. Hong Kong is famously resilient and will no doubt bounce back at some stage. In the meantime businesses are being dramatically hit and some landlords are now offering significant rental discounts on existing retail leases. As the C-Suite review their targets for the year, it will not be a surprise if many will be re-assessing their real estate needs in Hong Kong. This article will examine some of the key issues to consider in a COVID-19 world in the context of any evaluation of your commercial leasing portfolio in Hong Kong. We will also end this note with a few comments on whether force majeure provisions will now apply given the impact of Covid-19.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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