Retail property prices in Mongkok and Causeway Bay have hit the peaks of the 1997 bubble and are expected to rise further, according to FPDSavills. Surging retail property prices have been driven by strong spending by mainland tourists visiting the areas. 'Average prices in Mongkok and Causeway Bay have already exceeded 1997 levels,' said FPDSavills senior director Simon Smith. Prices in both areas and elsewhere in Hong Kong are expected to continue rising over the next year. 'Prices, we think, will probably rise by 20 per cent over the next 12 months,' Mr Smith said. Prime street shop prices have risen 57 per cent so far this year. Shopping centre units are not included in the figures as these are usually rented only by developers. Property prices in Central have yet to reach 1997 levels as the area is more dependent on domestic demand, which has been weaker. 'Mainlanders are still the influential factor, but domestic demand is recovering strongly now,' Mr Smith said. 'We notice domestic demand coming through in sales of more of the consumer durables - motor cars, that sort of thing, which usually indicates domestic demand. Tourist demand is more jewellery, watches, clocks, luxury brands.' Shop rents - at street level and in malls - are expected to rise 10 to 15 per cent over the next year. In addition to the booming cash registers, shop rents are rising on the back of a limited supply of premises. 'There is very little new shopping centre supply in core areas over the next year as well, so that's going to keep the pressure on rents,' Mr Smith said. Shopping centre rents are expected to lag high street units slightly, as these landlords are often more selective about tenants. 'We expect shopping centre rents to perform a bit more moderately than prime street shop centre rents,' Mr Smith said. 'Landlords have to think about trade and tenant mix, and you don't tend to get that massive escalation that you get in rents on the high street.'
