Hong Kong retail landlords ‘ready to negotiate’
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Hong Kong retail landlords are expected to be more flexible with lease terms as the market continues to recover, says real-estate consultancy Knight Frank.
With four consecutive months of positive growth, retail sales value rose another 0.1 per cent year on year in June.
Visitor arrivals during the first half of the year were up 2.4 per cent, led by 2.3 per cent growth in visitors from the Chinese mainland.
“Rental levels for prime street retail stores in different districts have mostly undergone adjustments,” says Knight Frank.
“Recognising that extra capital cost is needed to recruit new tenants and at the same time to avoid the risk of having empty shops for an extended period, landlords are now willing to make more adjustments during negotiations.
“Following the stabilisation in overall retail sales, we expect to see more realignments for retail stores in the comings days.”
The company believes the retail rental market is on track to bottom out before the end of the year.
Questions & Answers
Q.What is driving the increased flexibility from Hong Kong retail landlords?
What is driving the increased flexibility from Hong Kong retail landlords?
Landlords want to avoid the high cost of recruiting new tenants and the risk of shops remaining empty for prolonged periods. They are making adjustments during negotiations to address these concerns.
Q.How has the retail market in Hong Kong been performing recently?
How has the retail market in Hong Kong been performing recently?
The market has shown four consecutive months of positive growth, with retail sales value increasing by 0.1 per cent year on year in June. Visitor arrivals also rose by 2.4 per cent in the first half of the year.
Q.When is the retail rental market expected to stabilise or improve?
When is the retail rental market expected to stabilise or improve?
Knight Frank believes the retail rental market is projected to reach its lowest point and begin to recover before the end of the current year, indicating a future stabilisation.