The slowdown in economic growth on the mainland and in Hong Kong, and in the growth of visitor arrivals, could signal an end to the sharp increase in retail rents, say analysts.
After almost doubling in the last three years as retailers scrambled for prominent locations in tourist hot spots, rents in prime Hong Kong shopping districts are now likely to remain unchanged or at best show only modest growth, they say.
'In the short run, retail rents are close to their peak,' said Joe Lin, senior director of retail services at property consultancy CBRE.
'Until recently, retailers were willing to pay higher rents for shops in prime locations because retail sales were growing at such a high rate,' Lin said. 'But they have turned cautious this year because of the slowdown in retail sales and tourist arrivals from the mainland.'
Data from the Hong Kong Census and Statistics Department shows that total retail sales grew by 18.3 per cent in 2010 and by a further 24.9 per cent last year, to HK$405.3 billion. But the data shows that year-on-year growth in sales peaked in July at 29.1 per cent, and has since declined steadily to 17.3 per cent in the first quarter of this year.
Hong Kong Tourism Board data shows that growth in tourist arrivals from the mainland slowed to 21.1 per cent in the first quarter of this year, from 67.2 per cent in the first quarter of last year.
Official data shows Hong Kong economic growth slowed from 3 per cent in the final quarter of last year, to just 0.4 per cent in the first quarter of this year, while the mainland economy grew by 8.1 per cent in the first quarter from a year earlier, down from 8.9 per cent in the previous three months and a three-year low.
