Retail / news
Hong Kong retail leasing market faces prolonged downturn amid multiple headwinds
Hong Kong's retail leasing market remains under severe pressure, with rents dropping far below pre-pandemic levels as geopolitical tensions, capital flight controls, and potential US rate hikes add to uncertainties.
Rental rates for commercial street shops in Hong Kong have fallen by 74% from their 2014 peak and 44% from pre-pandemic 2019 levels, according to Jeannette Chan, senior director of retail at JLL. The decline has prompted a wave of relocations from secondary and tertiary locations to prime areas, with Queen's Road Central now fully occupied while vacancy rises on Des Voeux Road Central.
The food and beverage sector has been hit particularly hard, with closures of both casual eateries and high-end restaurants. Fast-food chain Maxim's MX scaled back operations and closed its South Horizons and Dragon Centre branches in June. Howard's Gourmet, a high-end Chinese restaurant that operated for over a decade in Central, quietly shut down at the end of May.
Rents for large, upper-floor commercial units fell nearly 20% on average in the first half of the year, said Liz Ling, executive director at House Property. She noted no clear signs of recovery in the local dining and retail sectors.
Analysts attribute the prolonged slump to multiple factors, including geopolitical tensions, Beijing's crackdown on capital flight, and the possibility of a US Federal Reserve rate hike in the second half of the year. These headwinds continue to weigh on investor and tenant confidence.