Hong Kong retail property: the worst may finally be over for sector, JLL says, but others suggest more pain ahead

Name: Hong Kong tightens social-distancing measures to cope with fourth wave surge of Covid-19 cases
Uploaded: 2020-12-15T06:00:11.000Z
Duration: 2 min 15 s
Description: Hong Kong tightens social-distancing measures to cope with fourth wave surge of Covid-19 cases

Rents of high-street shops and prime shopping centres to rebound in 2021, on the back of a modest economic recovery and travel bubbles: JLL’s head of retail

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Closed shops in Hong Kong’s Tsim Sha Tsui shopping district on December 13. Photo: K Y Cheng

Cheryl Arcibal

Published: 2:00pm, 15 Dec 2020Updated: 7:29pm, 15 Dec 2020

The worst may finally be over for Hong Kong retail property, with rents likely to pick up in 2021, according to JLL.

The sector is forecast to report an increase in rental rates of between 0 per cent and 5 per cent, with a decline in retail sales narrowing over the past two months and uptake of vacant shops rising, the consultancy said.

Relief for the sector follows about two years of battering from the city’s anti-government protests and the coronavirus pandemic. It is likely that it will buck the general downward trend in Hong Kong property, JLL said, as office rents are expected to decline by between 5 per cent and 10 per cent, while the residential market is likely to fall between 0 per cent and 10 per cent.

The values of high-street shops are likely to rise between 5 per cent and 10 per cent from a decline of about a third this year. The rents of such shops have plunged 36.8 per cent, and in prime shopping centres by 31.6 per cent, so far this year, JLL said.

“Rents of high-street shops have returned to the market level [last seen during the] fourth quarter of 2003. We expect the retail market to bottom out in 2021, driven by mid to mass-market retailers on the back of relatively stable domestic demand, with the worst behind us,” said Oliver Tong, head of retail at JLL in Hong Kong. “Sales have been cut to the bone and their next move is up. Rents of high-street shops and prime shopping centres are expected to rebound by 0 per cent to 5 per cent in 2021, on the back of a modest economic recovery and, potentially, some travel bubbles.”

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Hong Kong tightens social-distancing measures to cope with fourth wave surge of Covid-19 cases

Russell Street in Causeway Bay used to be the world’s most expensive retail space, but rents have fallen by a third to HK$1,000 (US$129) per square foot currently from about HK$3,000 in 2013.