Banks replace fashion in Hong Kong’s prime retail districts

HSBC is set to lease a prime corner retail space at Capitol Centre in Causeway Bay.

Hong Kong’s retail sector showed fresh signs of stabilisation in October, supported by a rebound in consumer spending and a shift in tenant demand, according to a report by Knight Frank.

Total retail sales from January to October reached HK$311.7 billion, narrowing the year-to-date decline to 0.2%, Knight Frank said. October sales rose 6.9% year on year, led by a strong recovery in consumer durables, which surged 16.4%. Luxury sales also improved, posting a 9.5% year-on-year increase.

Knight Frank noted that while sales momentum has strengthened, structural changes are reshaping the city’s retail landscape. Finance and banking firms are increasingly taking up space in prime shopping districts, traditionally dominated by fashion and luxury brands.

One notable example is HSBC, which is set to lease more than 40,000 sq ft of prime corner retail space at Capitol Centre in Causeway Bay. The deal marks the first time since 2008 that a non-fashion tenant has secured a long-term lease along one of the district’s busiest shopping streets, signalling a shift away from traditional retail uses.

Looking ahead, Knight Frank expects a widening performance gap between prime and non-prime retail assets by 2026. Prime retail properties are forecast to remain resilient, with positive rental growth supported by a recovery in tourism and improving retailer demand.

In contrast, non-prime retail is likely to remain under pressure amid ongoing structural headwinds, including increased northbound spending by local consumers and the continued rise of online shopping, the consultancy said.