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Coronavirus Hong Kong
Opinion
Nicholas Spiro
Nicholas Spiro

The View | How Hong Kong’s retail property sector is being pulled in two different directions

  • A leasing market driven by domestic consumption, and powered by F&B operators, is helping the city cope with its zero-Covid-induced isolation
  • However, landlords are betting on the return of luxury shoppers from the mainland, keeping the vacancy rate high

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Customers line up for dinner outside a restaurant in Mong Kok on February 18. The F&B industry has been the major beneficiary of the “domestication” of Hong Kong’s retail market. Photo: Edmond So
Nicholas Spiro
It has been a while since Hong Kong, a city that has suffered a succession of major shocks over the past several years, took the top spot in an economic or industry forecast. That it should happen in the hard-hit retail sector, which has been dealt a series of crippling blows, is all the more remarkable.

In its midyear review published in August, CBRE predicted that high street rents in prime locations in Hong Kong would rise 5 per cent year on year this year, the strongest growth in the Asia-Pacific region, and a dramatic turnaround from the sharp fall in 2020.

To be sure, Hong Kong’s retail property market is still reeling from the damage incurred over the past several years. The pandemic-induced closure of the border with mainland China is just the latest, albeit the most severe, calamity to befall the sector.
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Mainland visitors – who accounted for as much as 80 per cent of the city’s tourist arrivals before the virus struck – began tightening their purse strings some time ago.

According to data from CBRE, prime high street rents fell a staggering 40.7 per cent in the three years to the third quarter of this year.

04:10

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

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

The disappearance of mainland tourists has accelerated a shift away from luxury and premium brands targeting wealthier Chinese shoppers towards mid-to-mass market retailers catering to the city’s residents. One in five shops selling jewellery, cosmetics, clothing and leather goods have shut down since the third quarter of 2018, data from Midland IC&I shows.

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