Consumer woes spoil rent outlook
Retail rents are likely to decline further because of shrinking sales by retail outlets, according to Jones Lang LaSalle.
The consultant said retail businesses were likely to remain difficult for the rest of the year. Consumer confidence continued to be the weakest in the Asia Pacific with a large proportion of consumers being highly pessimistic about the economic outlook.
Two separate surveys on consumer confidence in the region showed the outlook in Hong Kong was weakest. Jones Lang LaSalle said with poor retail business prospects, demand for retail properties would possibly be low.
'Demand for retail space is primarily a derivative of retail sales. Expansion of retail outlets would be difficult to be justified on shrinking retail sales,'' it said.
'Indeed overall demand for retail space would fall as some retailers downsize or close down. Consequently their ability to pay rent is also diminished, leading possibly to further decline in retail rents.''
However, the higher number of mainland visitors, along with their above-average spending, was likely to benefit Hong Kong retailers who catered for them, it said. These included jewellers, electronic products vendors and renowned global brands.