Hong Kong should brace for further deterioration in retail property prices, due to the economic downturn and the heavy supply of new shopping arcades coming on stream, analysts said.
In view of the slowing economy and subdued sales, a further decline of 10 to 15 per cent was possible over the rest of this year, they said.
Property consultants Sheraton Valuers director Lawrence Wong said the effects of Asia's economic turmoil - increases in interest rates and tighter credit - had taken its toll on the Hong Kong retail property sector, causing rents and prices to drop sharply in the past six to seven months.
He said sales activity had fallen 90 per cent from its peak last year, with values down 40 per cent.
The leasing market faced a decline in demand for space from international and local retailers, who had suffered from a drop in local consumption and tourist spending.
Mr Wong said rents in retail shops saw a 30 per cent drop from the peak last year.
He said local consumers' confidence could be further hit following the recent bearish forecast by the Organisation for Economic Co-operation and Development of 0.9 per cent GDP growth for Hong Kong this year.
