Hong Kong’s retail sector entered a “mini-ice age” in February, according to property consultancy Savills, with a decline in retail sales and a rise in unemployment, although the city’s new consumption voucher scheme (CVS) offers some hope for the future. The combined value of retail sales in January and February fell by 4.9 per cent year-on-year to HK$59.04 billion, while the sector’s unemployment rate rose to 6.9 per cent in February, up from 5.4 per cent in December, according to provisional figures released by the Census and Statistics Department. “Even the hardy perennials of the local retail scene, [food and beverages] and necessity trades, have begun to wilt as the new [Omicron] variant has forced many to shutter their businesses,” said Simon Smith, regional head of research and consultancy Asia-Pacific, at Savills In recent weeks, Hong Kong has been rocked by a fifth wave of Omicron-driven Covid-19 infections, with strict anti-pandemic measures such as lockdowns and social distancing, dampening consumer sentiment and piling the pressure on shops and retail businesses. 8-year-high exit rate for native English teachers at Hong Kong secondary schools Some 20 per cent of high street shops in Tsim Sha Tsui were vacant in March, up from 15.9 per cent in December, while average rent in the area fell by 5.9 per cent, according to data released on Wednesday by real estate firm CBRE. Pharmacies and supermarkets were the only retailers to have seen some growth during the recent period, with leases for shops that sell medicines and cosmetics increasing more than fivefold in the first quarter, according to CBRE’s data. Leases for restaurants fell from nearly 50 per cent of all leases to just 15 per cent for the same period, according to CBRE. There is some optimism that the situation may be alleviated by Hong Kong’s new voucher scheme. The government will begin distributing the first half of the HK$10,000 consumption voucher on April 7, to stimulate the battered retail market. “With social distancing measures set to relax from late-April and the first batch of [consumption vouchers distributed], the retail market would expect a stronger rebound in the second half of the year,” said Lawrence Wan, senior director of retail advisory and transaction services at CBRE Hong Kong. Hong Kong in bottom quadrant as home prices rise globally to 18-year high The vouchers may be too late for the city’s luxury segment though. British luxury fashion house Burberry recently closed its flagship store on Hong Kong’s Russell Street in Causeway Bay, once the world’s most expensive shopping strip, following the decision by Italian fashion label Prada to shut its 15,000 sq ft outlet in June 2020 and the closure of lingerie maker La Perla’s store three months later. International luxury brands are shifting their focus towards alternative shopping paradises in mainland China, including Shanghai and Hainan, where sales are more reliant upon domestic shoppers than inbound tourists, according to Savills’ Smith. “A broader and more sustained recovery will have to count on the resumption of cross-border and international travel,” he said, adding that nearby metropolises with fewer travel restrictions, including Kuala Lumpur, Hanoi and Ho Chi Minh City, are also popular destinations. Meanwhile, a recent survey of 260 executives by the European Chamber of Commerce showed that nearly half of all European businesses in the city were considering moving elsewhere next year. Among the firms planning to leave, a quarter said they would fully relocate in the next 12 months, while 24 per cent planned to move at least partially. Hong Kong nano flats sales ebb as buyers shift focus to bigger homes The momentum of office leasing remains slow, with 11.6 per cent of spaces vacant by the end of March, the same proportion as the end of last year, according to Ada Fung, head of office services at CBRE Hong Kong, speaking at the firm’s quarterly briefing on Wednesday. Co-working centres, wealth management firms and insurance companies were among those signing up for new premises during the first quarter, according to Fung.