Hong Kong’s protest-hit retail property market hasn’t seen the worst yet. Will shopping mall landlords finally slash rents?

In addition to the global trend of stiff competition from online retailers, Hong Kong shops have faced a sharp drop in mainland visitors and protest vandalism

Stocks of retail property owners are not yet at historic lows, showing the sector has not hit rock bottom

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Riot police enter Citywalk Mall in Tsuen Wan after anti-government protesters vandalised facilities and shops on November 10. Photo: Sam Tsang

Published: 9:30am, 26 Nov 2019Updated: 9:38am, 26 Nov 2019

Just a cursory glance at the latest data on global commercial property transactions shows that the retail sector remains deeply out of favour with investors.

In a report on investment activity in the world’s leading commercial real estate markets in the third quarter of this year, property adviser JLL noted that the retail sector is still the least liquid, or actively traded, market. In the first nine months of this year, global retail transaction volumes fell 8 per cent year on year, compared with a 25 per cent increase in deals in the industrial sector.

The woes of the retail industry stem mainly from the huge disruption caused by the “Amazon effect” in the US and Britain – the world’s largest and fifth-largest retail markets respectively – as spending migrates from bricks-and-mortar stores to online channels, fuelling concerns about a “retail apocalypse” at shopping malls and on high streets.

In Hong Kong, the disruption is of a different kind and has been much more severe since the mass anti-government protests erupted in early June.

Retail sales in the territory plummeted more than 18 per cent year on year in September, following a record-breaking 23 per cent decline in August. The tourism industry, a pillar of the economy, has been decimated, with visitor arrivals down 34 per cent in September as mainland tourists – who account for 78 per cent of arrivals – fear for their safety.

Never mind the Amazon effect, Hong Kong’s retail industry is having to contend with violence and vandalism on a massive scale.

Hong Kong’s protest-hit retail property market hasn’t seen the worst yet. Will shopping mall landlords finally slash rents?

In addition to the global trend of stiff competition from online retailers, Hong Kong shops have faced a sharp drop in mainland visitors and protest vandalism Stocks of retail property owners are not yet at historic lows, showing the sector has not hit rock bottom

In addition to the global trend of stiff competition from online retailers, Hong Kong shops have faced a sharp drop in mainland visitors and protest vandalism

Stocks of retail property owners are not yet at historic lows, showing the sector has not hit rock bottom