Rents, prices of Hong Kong shops in core shopping districts could sink 80 per cent in next two to three years, property agency says
- One in seven shops will be vacant in the three months to September in Causeway Bay, Tsim Sha Tsui and Central, Midland IC&I says
- Vacancy rates are currently higher than during the Sars outbreak
The rents and prices of shops in Hong Kong’s core shopping districts could plunge to 2006 levels – a decline of 40 per cent – by the end of this year, Midland IC&I, an agency that has tracked shop vacancies since 2016, said on Tuesday.
Rents and prices could even drop by 80 per cent in next two to three years, if retail sales and the economy do not pick up, it added.
The agency, which deals in retail, office and industrial property, forecast that one in seven shops, or up to 15 per cent, will be vacant in the three months to September this year in the Causeway Bay, Tsim Sha Tsui and Central districts of Hong Kong, about two times the same period in 2018. These districts along with Mong Kok will see 900 shops lie vacant in the three-month period, more than a historic high of 689 vacant shops recorded in February.
“From the Sars [severe acute respiratory syndrome] epidemic to now, rents almost surged 10-fold in core districts. A drop of 80 per cent will bring [rents and prices] to that level,” Daniel Wong, the agency’s chief executive, said. “We are really not very optimistic about the market.”
The trend will be the same for next year and the year after, with shop rents sliding gradually, he said. It is perfectly possible that rents and prices will go back to levels seen before 2003.
In the second quarter of 2019, shops on Russell Street, Causeway Bay’s main shopping avenue, was the world’s most expensive retail street at US$2,745 per square foot a year, according to commercial real estate services firm Cushman & Wakefield. In 2018, the rent was US$2,671 per square foot.