Hong Kong’s retail sector entered a ‘mini-ice age’ in February although consumer voucher scheme could improve sales: Savills

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.

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.