Causeway Bay retail rents slide
Causeway Bay retail rents – for street shops, at least, suffered a significant 10.7 per cent quarterly decline in the second three months of this year.
Figures from CBRE show Central and Mong Kok retail rents fell a more modest 1.4 per cent and 1.3 per cent quarter on quarter drops. Tsim Sha Tsui rents were flat.
CBRE says declining retail sales continued to negatively impact retail leasing demand in the second quarter.
“Luxury brands remained cautious towards expansion and the period saw several jewellery brands attempt to surrender space,” the quarterly report noted.
Joe Lin, executive director, retail services, with CBRE Hong Kong, said falling retail sales, coupled with retailers’ cautious leasing sentiment will further weaken retail rents in the remainder of 2015.
“Mid-range brand retailers may continue to show demand for space in prominent retail locations, subject to landlords adopting a more realistic position on asking rents.”
CBRE projects further retail rent decline in the third quarter as deals agreed at lower rents in recent quarters have set new benchmarks for future negotiations.
Landlords are now more flexible on their rent expectations as they do not want to see premises vacant and luxury retailers are predicted to consolidate their store networks.
But on the plus side, non luxury brands, supported by stable local and tourist demand, are set to expand their footprints.
“The shift in Mainland Chinese tourists’ spending patterns has restructured retail leasing demand. Demand from luxury brands for large flagship stores diminishes, while non-luxury retailers are gradually taking up large retail unit space,” said CBRE.
A notable trend in the second quarter was seeing mid-range fashion brands take some of the spaces vacated by watch and jewellery stores.