Hong Kong high street rents to increase by 8% for full-year 2023 | Real Estate Asia

Hong Kong high street rents to increase by 8% for full-year 2023

Market recovery should gain momentum by the second half of next year.

The recovery in Hong Kong’s retail market has been more evident with a notable increase in retail sales by 15% YOY in July and August, and high street rents pushed up by 2.1% QOQ in Q3, according to a Colliers report. Key resilient retail trades including F&B, athleisure apparel, goldsmiths, and cosmetics & pharmaceuticals have been able to leverage the current rental level to conduct expansion and relocation exercises to tier-one locations.

“High street rents are forecasted to grow by 8% YOY in 2023, though retailers remain cautious on short-term expansion plans. We foresee a more distinguished market recovery from H2 2024 and beyond, with a focus on retail experiences and a greater diversity of brands,” said Cynthia Ng, Head of Retail Services at Colliers in Hong Kong.

Here’s more from Colliers:

The retail market remained sanguine as highstreet rents added 2.1% QOQ in Q3, while retail sales increased by 15% YOY over July-August.

Resilient retail sectors have leveraged the current adjusted rent to expand or relocate to first-tier locations; these include F&B, athleisure apparel, goldsmiths, and cosmetics and pharmaceuticals. 

The government has launched two campaigns – “Hello Hong Kong” and “Night Vibes Hong Kong” to boost tourism and spending. During the summer holidays and National Day Golden Week, Mainland visitor numbers surged. In Q3, overall visitor arrivals reached approximately two-thirds of their 2018 level. 

High street rent is forecast to increase by 8% YOY for the entire year. Over the next few quarters, retailers will likely remain cautious about their steady gains, but we should see a more distinct market recovery take hold in H2 2024. 

The labour shortage problem and the weak RMB vs USD/HKD on the back of high interest rates pose uncertainties for a more significant market recovery. However, the new Labour Importation Schemes and a potential end to the US Fed rate hikes in 2024 could offset some negativity. 

Upcoming retail developments will focus on offering shoppers fresh experiences, and existing operators are also working on creating new lines or labels to attract more footfall.


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