Revival of Hong Kong retail scene underlined by modest 2.2 per cent growth in 2017 after three-year decline
But industry insiders warn of rising operating costs for retailers as some landlords start to increase rents as a result of improved business
An economic boom and rising tourist numbers resulted in Hong Kong retail sales returning to modest growth of 2.2 per cent last year, officially spelling the end of a years-long spending chill.
However, industry insiders warned of rising operating costs for retailers as some landlords had started to increase rents as a result of the improved retail business.
The revival of the city’s retail scene following three years of declines was revealed in government statistics on Thursday that showed December sales jumped 5.8 per cent compared with the same period last year, down from November’s 7.5 per cent growth, which was the biggest year-on-year increment in almost three years. This put the provisional value of total retail sales in 2017 at HK$446.1 billion (US$57.2 billion), a rise of 2.2 per cent over the previous year.
A government spokesman said the robust sales growth in December reflected the upbeat consumption sentiment amid favourable employment and income conditions and the continued revival of inbound tourism.
“The near-term outlook for the retail trade remains positive, given the more sanguine economic situation and improving inbound tourism,” the spokesman said.
The government forecast the city’s economic growth in 2017 at 3.7 per cent, following robust growth of 3.9 per cent in the first three quarters on the back of strong stock and property markets and an improved global environment.
Thomson Cheng Wai-hung, chairman of the Retail Management Association, forecast a positive outlook for retail sales this year with 3-4 per cent growth, or even better at 5 per cent.
“Most of our members are very positive on the sales performance in January and February as the New Year festive season is spelling upbeat spending sentiment. Overall, we expect a rise of 5-6 per cent for these two months,” he said, as the overall economy was showing strong momentum.
“As the yuan has strengthened, which will spur tourist spending, coupled with the ‘wealth effect’ supported by the buoyant stock market expected this year, we have an optimistic forecast for 2018.”
But Cheng admitted that the good retail performance would also bring rising rents. “Some landlords have started to increase rents. We think this trend will continue,” he said.
Last year visitor numbers to Hong Kong rose 3.2 per cent to more than 58 million, with mainland tourists accounting for 44 million, up 3.9 per cent.
Cheng predicted the number of mainland visitors would continue to rise this year due to the coming opening of the Hong Kong-Zhuhai-Macau bridge and the high speed rail link to the mainland.
Among the retail goods, medicines and cosmetics remained the hot items with a rise in sales of 5.5 per cent followed by a 5.2 per cent increase in the sales of jewellery, watches and clocks. Sales of electrical goods and photographic equipment registered the biggest drop of 9 per cent in value.