Hong Kong high-street rents record fastest growth in two years

Shop rents grew by 2.7% in Q1 2024.

In a recent release, CBRE said retail leasing momentum in Hong Kong slowed partly due to the falling vacancy, while this quarter retail sales and visitor arrival remained on an upward trend although growing at a slower rate. 

Following a growth of 16.2% year-on-year over full-year 2023, total retail sales rose 0.9% year-on-year in January and 1.9% in February, increasing for the 15 consecutive months.

Here’s more from CBRE:

Expansionary leasing demand ensured vacancy dropped by 2.5-ppt quarter-on-quarter to 6.6%, the lowest figure since Q4 2019. Vacancy across all four core districts reported the single digits, the first time since Q2 2018. Vacancy in Central logged the sharpest drop, falling 5.3-ppt to 6.6%. Tsim Sha Tsui and Mong Kok saw vacancy fall 2.9-ppt and 2.3-ppt, respectively, to 5.8% and 7.4%. Vacancy in Causeway Bay remained unchanged.

Although F&B and luxury retailers displayed a slowdown in expansion, entertainment-related retailers were active in the quarter.

Lower vacancy ensured high-street shop rents rose by 2.7% quarter-on-quarter, the fastest growth since Q3 2022.

Lawrence Wan, Senior Director, Head of Advisory & Transaction Services – Retail, CBRE Hong Kong: “The vacancy across four core districts dipped to the single digits, thanks to the active leasing activities over the past few quarters. The leasing momentum has softened in Q1 2024 due to the reducing options on high streets. While some F&Bs have reduced their scale of operations, many new openings were found. High-street rents have climbed up by 2.7%, the highest quarter-on-quarter growth since Q3 2022. Retailers are expected to carefully assess the recovery of Hong Kong’s inbound tourism and with the government’s efforts in launching more international events, the outlook is bright.”