As Hong Kong retail rents sink, new overseas retailers, mass-market brands eye expansion on the cheap
- Most new leases signed will be 30 per cent to 50 per cent cheaper than previous leases, according to Cushman & Wakefield
- Harbour City shopping centre to debut 20 new brands as well as restaurants in April and May
It is a time for bargains for new overseas and mass-market retailers looking to expand in Hong Kong, following a sharp correction in retail rents, property consultants said.
“We are in talks with more than three overseas retailers, who are interested in entering the Hong Kong market. They are aiming to open in the third and last quarter of this year, and want to capture the 2021 Lunar New Year shopping season, a traditional peak season for the retail industry,” said Kevin Lam, executive director and head of retail services in Hong Kong at agency Cushman & Wakefield.
Lam said he expected most new leases that are signed will be 30 per cent to 50 per cent cheaper than previous leases. “It is a time to bargain,” he added.
Retailers have been hit hard by the Covid-19 pandemic and resulting containment measures implemented by the Hong Kong government. Moreover, the outbreak followed months of anti-government protests, which kept big-spending mainland Chinese tourists away, hurting the retail sector in the process.
Retail rents in Hong Kong’s Central district dropped by 20 per cent to an average of HK$534 (US$68.9) per square foot per month in the first quarter, the biggest drop among any of the city’s core business areas, according to the agency.
Vacancies too have risen, jumping by 7.3 percentage points to 20 per cent in Mong Kok, a record going back a decade. In other areas, such as Causeway Bay, vacancies have risen to 5.3 per cent, and in Central and Tsim Sha Tsui to 14.2 per cent and 4.8 per cent, respectively, according to Cushman.