Hong Kong luxury retail street turns into a food street

Russell Street in Causeway Bay has transformed over the course of the pandemic.

Hong Kong’s retail market remained in the doldrums amid the fifth wave of COVID-19. According to CBRE, total retail sales value in March plunged by 13.8% YoY to HK$23.8 billion, following a 17.6% slump in the previous month. 

“With the disbursement of the first batch of electronic consumption vouchers in early April, most retailers, especially those selling electronics and premium groceries, recorded a surge in sales during the Easter holidays. But restaurants did not benefit much from higher traffic, as the two-person-per-table restriction was still in place. Overall, retailers reflected that sales performance was the strongest in the first week of April, but sales gradually weakened in the following weeks,” CBRE said.

Here’s more from CBRE:

The F&B sector has faced huge pressure under the stringent social-distancing measures. The value of total receipts in the restaurant sector was only HK$3.93 billion in March, a record low for the month, according to the latest data from the Census and Statistics Department. There was an upsurge in the surrender of shop units by food operators, as many restaurants had been struggling to stay afloat, and some failed to survive. For instance, London restaurant Duck & Waffle closed its Hong Kong location at IFC Mall. 

It is worth mentioning that Russell Street, in Causeway Bay, has seen some remarkable changes, as it has switched from a luxury retail street into a food street. For one thing, in Q4 2022, the world’s first Transformers-themed restaurant, owned by catering group A La Carte (HK), will take the shop previously occupied by Burberry. It will be the latest international restaurant chain on Russell Street, following Ruby Tuesday and Five Guys. Owing to the absence of tourists, businesses are now locally driven. Embracing more F&B tenants in prime streets is a quick-win solution for landlords to improve cash flow at the moment, while the new tenants are not paying high unit rents. 

Since retail headwinds continue to linger, owing to the volatile stock market, delays in border reopening, and concern about the emergence of a sixth wave of infections, we expect the retail market to take considerable time to recover. Shop rentals will remain suppressed with a growing number of surrender cases.