These foreign brands are expanding their retail footprint in Hong Kong

Major brands expanded their lease in shopping malls and streets.

According to a Knight Frank report, Hong Kong’s retail market remained weak, with total retail sales value declining for the sixth straight month in August 2024, registering a 10.1% YoY decrease to HK$29.2 billion. 

“Outbound travellers continued to outnumber visitor arrivals, which further undermined local retail market performance. Local departures from Hong Kong surged more than 29.8% in July and August 2024 compared with the same period in 2023, while there were only 8.38 million total visitor arrivals in Hong Kong (a 9.3% increase) during the same period in 2024.”

Here’s more from Knight Frank:

Total retail sales value for tourism-related categories, namely clothing, footwear and allied products, department stores, jewellery, watches and clocks, and valuable gifts declined by 11.0%, 15.6%, and 15.8% YoY, respectively, from January to August 2024. Local spending was also weak, as reflected in the decline in the sales value of the food and supermarkets category compared to that in 2023, dropping by 4.4% and 2.0% YoY, respectively. 

On the leasing front, there were a handful of expansion cases from foreign brands in major shopping malls and streets. The Swatch Group expanded its footprint, taking corner shop G35 in Mira Place, Tsim Sha Tsui. The shop is about 1,000 sq ft, with a monthly rent of HK$400,000. 

Apparel retailer Abercrombie & Fitch will return to Hong Kong and open two new stores – 7,000 sq ft. in Hysan Place, Causeway Bay, and more than 10,000 sq ft. in New Town Plaza, Shatin – eight years after it closed its four-storey flagship store in Central in 2016. Other fashion groups expanding in Hong Kong include Mango, which has rented a 19,000 square-foot store in Asia Standard Tower in Queen’s Road Central for about HK$1.2 million a month. 

In the investment market, owing to the US Fed’s interest rate cut, transaction momentum is gradually returning. A notable transaction was recorded in Tsim Sha Tsui for G/F Unit D1, D2, E&F at No. 86 Nathan Road, about 4,500 sq ft in total, which was sold for HK$200 million. The transaction was rumoured for several months and was finalised after the rate cut announced by the Fed. Although the current rental yield of the shop is said to be about 3.5%, which is lower than the expected yield from other transactions earlier this year, it shows that investors are still confident in prime street shops bringing more value after the gradual rate cut. 

The retail market is still adjusting and adapting to the new consumption patterns by both tourists and locals. Shopping mall landlords are more flexible in rent negotiations in the short term to maintain a higher occupancy rate. Prime street shops in core areas remain attractive to investors waiting for the market to rebound. As market headwinds continue, retailers and restaurants are still cautious about further expansion.