Tsim Sha Tsui now Hong Kong’s most expensive retail area, with Causeway Bay luxury sales hit
- Retail rents in Tsim Sha Tsui declined by about 17 per cent between April and June, while those in Causeway Bay fell about 25 per cent
- Tsim Sha Tsui rents more sustainable as its retail landscape is owned and supported by major developers, consultant says
Tsim Sha Tsui, which is home to Canton Road and its Hermes, Chanel and Gucci luxury boutiques, has seen rents decline by about 17 per cent in the three months between April and June to an average of HK$1,018 (US$131) per square foot a month, real estate consultancy Cushman & Wakefield said. Retail rents in Causeway Bay, meanwhile, dropped by 25 per cent to HK$969 per square foot a month over the same period.
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“Rents in Tsim Sha Tsui will be more sustainable because its retail landscape is owned and supported by several major developers,” said Kevin Lam, Cushman’s executive director and head of retail services in Hong Kong. “The retreat of luxury will push the vacancy rate in Causeway Bay further up this year. Incoming non-luxury tenants are likely to drag down rents along with a shift in the tenant mix,” he said.
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“The prospects for high-street retail remain challenging. Non-discretionary retail, pop-up shops, shopping malls with organised promotional efforts and more supportive elements for tenants will be among the emerging trends in the coming quarters,” Lam said.
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The city’s retail sector has been on its knees – retail sales fell 32.8 per cent year on year in May, which was the 16th consecutive month of declines. The sales of jewellery and watches declined by about 70 per cent.
And the outlook remains bleak amid the pandemic, rising unemployment and the worst recession since records began in 1974.
“In two-three years’ time, retailers will be more focused on cost saving than expansion. They will be looking for lower rents,” said Lawrence Wan, senior director of advisory and transaction services, retail at CBRE.