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Inside Out | Hong Kong’s once-vibrant retail sector faces perilous times
- The sight of steadily falling rents in Hong Kong’s top shopping districts and high-end stores closing bodes ill
- For Hong Kong to thrive requires a significant restructuring of the economy with less reliance on tourists and their retail spending interests
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Hong Kong might still stand among the most attractive and expensive shopping hubs in the world – a surprising tribute to the city’s retail resilience in spite of the dark tunnel the economy has crawled through during the past four years. The question of how long this will remain so has come into sharp focus with two striking developments during the past week.
First, there was a “Main Streets across the World 2023” report from international property consultants Cushman & Wakefield. The report paints in fine detail the trends in luxury retail shopping in hundreds of high streets across the world.
Worldwide, Cushman reports that most prime central business districts remain vibrant, with the top 250 retailers reporting an average 8.5 per cent growth in business in 2022.
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But the story for Hong Kong is perilously mixed: Tsim Sha Tsui and Causeway Bay retail rental costs remain the highest in Asia. There are questions over whether such stratospheric rental levels reflect vibrancy or can be sustained.
Tsim Sha Tsui rentals have slipped from second- to third-highest worldwide, with New York’s Fifth Avenue still the most costly in the world and Milan’s Via Montenapoleone overtaking Tsim Sha Tsui to capture second place.
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While Hong Kong still demands the highest retail rentals in Asia by a large margin – 50 per cent higher than Ginza or Omotesando in Tokyo and three times the rentals along Shanghai’s West Nanjing Road – the reality is that rents have fallen by almost 40 per cent since 2019.
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