Hong Kong’s retail sector, stuck in the doldrums, pushes vacancy rate of street-level shops to record high

Name: Hong Kong retailers should create experiences for local shoppers to survive with ‘zero tourists’
Uploaded: 2020-09-15T11:14:09.000Z
Duration: 4 min 10 s
Description: Hong Kong retailers should create experiences for local shoppers to survive with ‘zero tourists’

The vacancy rate in the main shopping districts of Causeway Bay, Mong Kok, Central and Tsim Sha Tsui has reached a record high of 12.6 per cent, says Midland IC&I

The property agency expects rents to fall by 40 to 50 per cent in the core districts by the end of the year

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A slew of closures has pushed the vacancy rate of street level shops to a record high in Hong Kong. Photo: Felix Wong

Lam Ka-sing

Published: 7:14pm, 15 Sep 2020Updated: 11:44pm, 15 Sep 2020

The vacancy rate of street level shops in Hong Kong’s four major shopping districts – Causeway Bay, Mong Kok, Central and Tsim Sha Tsui – has reached a record high of 12.6 per cent and is expected to climb to 14 per cent in the first quarter next year, as the retail sector sees no respite from the economic downturn brought about by the coronavirus pandemic, according to Midland IC&I.

And as the vacancy rate mounts, shop rents in the core districts are likely to sink by 40 to 50 per cent this year alone, taking it back to 2006-2007 levels, it added.

A total of 945 shops were empty in the four districts compared to the record low of 408 or 5.6 per cent reached in the third quarter of 2018, a report by the commercial property agency on Tuesday showed. The survey tracked 10,250 shops in 221 streets across five districts in July and August. Across Hong Kong, 8 per cent or 4,000 of the nearly 50,000 street level shops were empty.

“The market has not seen the bottom,” said Daniel Wong, chief executive at Midland IC&I. He said that the retail industry is undergoing a structural change and that the peak of the market has already passed, adding that a lot of shop owners still refuse to accept the reality and are still asking for prices above the prevailing market rates.

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Hong Kong retailers should create experiences for local shoppers to survive with ‘zero tourists’

Hong Kong’s economy has contracted in the past four quarters, marking its worst recession on record. The Covid-19 pandemic, as well as months of social unrest last year, have choked tourism and undermined the government’s efforts to revive activity.

Without the power of tourist dollars, Hong Kong has recorded steep declines in retail sales for 18 straight months, according to official statistics. They amounted to HK$187 billion (US$24 billion) this year through July, or HK$26.7 billion a month, compared with an average of HK$36 billion a month in 2019.