Hong Kong retail rents to grow by 5% in 2022
But only if no major outbreak pulls back leasing demand yet again.
Hong Kong’s retail leasing market seemed to have generally improved in the final quarter of 2021. According to CBRE, high-street shop vacancy fell by 2.3-ppt q-o-q in Q4 2021 to 14.4%.
Tsim Sha Tsui saw the sharpest decline, down 4.3-ppt q-o-q to 15.9%. Overall vacancy fell 1.3-ppt over full-year 2021, with Mong Kok the only submarket in which vacancy rose during the year, up 1.7-ppt.
Here’s more from CBRE:
F&B, fashion and related brands as well as cosmetics stores were the largest demand drivers for retail space in 2021, accounting for over 70% of the leasing transactions in 2021. F&B on its own had close to a 50%-share.
Owing to relatively high vacancy, improved leasing momentum did not translate into substantial rental growth in Q4 2021. High-street shop rents held flat during the quarter, ensuring full-year growth stood at 1.2%.
Lawrence Wan, Senior Director, Advisory & Transaction Services – Retail, CBRE Hong Kong: “Over 2021, F&B, particularly Japanese cuisine, remains the most active sector in the leasing market. Mass market brands and necessity item retailers have been relatively more positive. Improved market sentiment has seen some landlords holding a firmer stance in terms of rental asking. Therefore, vacancy might stay high as the expectation gap between landlords and tenants widens. We expect retail rents to edge up about 5% in 2022 assuming no major local pandemic outbreak and hence no tightening in social distancing measures which could lead to a pullback in leasing demand.”