Hong Kong retail expansion ahead

Many Hong Kong retailers plan to open more stores next year, a new JLL survey shows.

The realty consultancy firm found that 62 per cent of overseas and local retailers in its survey plan new stores despite predicting a recovery in retail rents in core shopping precincts like Causeway Bay, Central and Tsim Sha Tsui.

Rates have plummeted more than 40 per cent from the market peak in 2014, says the survey, but half of the 50 retailers surveyed last month believe Hong Kong’s retail market will bottom out and recover next year.

While all respondents believe high-street rentals are overvalued, there is an equal balance between retailers who prefer to open a store in a shopping mall and those who favour a street-level outlet.

“Hong Kong’s retail market is still challenging, but the mood among retailers has changed from pessimistic last year to believing the worst is over and there are now opportunities,” says JLL Asia Pacific director James Assersohn.

He says the city’s prominence in the global map of retail and luxury goods has not been diminished amid a strong domestic consumer market and its exposure to the Mainland Chinese market.

More tourists

Statistics from the Hong Kong Tourism Board offer more reasons for optimism: total tourist arrivals in the first five months this year rebounded 3.2 per cent year-on-year to 23.6 million. Moreover, visits by overnight tourists, who spend double on shopping than same-day tourists, rose 5.7 per cent to 11 million.

“Tourist numbers are bouncing back. Hong Kong’s rentals have come down and still need a small amount of correction to create an equilibrium. However, business is booming for many retailers and the reduced rentals have left a great opportunity to obtain prime retail space,” says Assersohn.