Hong Kong retail rents grow 3.7% in H1 2024

Rents rose by 1% in Q2 alone.

Leasing momentum in Hong Kong’s retail sector softened quartering H1 2024 due partly to reduced space availability and rising uncertainty towards consumers’ spending patterns, according to Knight Frank. Total retail sales declined by 6.1% year-on-year in the first five months of 2024.

Here’s more from Knight Frank:

F&B groups continued to be a major source of leasing demand, contributing 197,000 sq. ft. of leasing volume this quarter. While demand from watch and jewellery retailers and pharmacies slowed due to the slow rebound in visitor arrivals, low rents supported entry and expansion by fashion brands in core districts.

Vacancy edged up by 0.2-ppt q-o-q in Q2 2024, but improved noticeably from 9.1% at end-2023. Vacancy in Central improved from 11.8% to 9.2% while that in Tsim Sha Tsui was largely flat during the half-yearly period.  Causeway Bay also saw vacancy improve from 5.3% to 3.9% in H1 2024, while Mong Kok observed noticeable improvement from 9.7% to 6.3% during the same period.

Slower leasing momentum ensured a marginal slowdown in rental growth, with overall rents increasing by 1.0% quarter-on-quarter in Q2 2024, compared to 2.7% quarter-on-quarter in Q1 2024. This brought the half-yearly growth to 3.7%.

Lawrence Wan, Senior Director, Head of Advisory & Transaction Services – Retail, CBRE Hong Kong: “While the leasing momentum has slowed in the first half of 2024, it has still managed to surpass the levels seen in 2018/2019 level. The slowdown was largely due to a downturn in retail sentiment and fewer available options on high streets. The primary drivers of leasing activities in the first half of the year were the F&B, clothing & footwear retailers, and pharmacies. We observed a varied performance within the F&B sector, with most groups reporting an uptick in year-on-year restaurant receipts, except for bars in Q1 2024. Currently, high-street shop rents are approximately 30% lower than the peak in 2019.”