Central retail vacancies edge up as luxury sales decline
The rate of Central retail vacancies edged up in the second quarter.
However, vacancy rates in other key retail precincts remained the same, according to a report by Cushman & Wakefield.
In Central, the vacancy rate was up to 8.6 per cent at the end of June compared with 7.1 per cent at the end of March.
Meanwhile, reduced retail spending has dented retail rental growth in core districts, where Tsim Sha Tsui and Mongkok recorded a smaller quarterly rental growth than in the first quarter at 0.7 per cent quarter on quarter 1 per cent respectively. Causeway Bay rents were up 0.7 per cent, however Central experienced a further drop of 3 per cent – almost double the decline of the first quarter.
The rental and vacancy rate trends are being driven by a softening retail market, where overall sales fell by 1.8 per cent in the first five months of the year. June figures are expected to show a sharper decline as massive protests impacted on store sales.
“Cautious consumer sentiment amid global and local uncertainties affected the performance of the Hong Kong retail market in the second quarter, and the outlook is expected to remain subdued in the second half of the year, except for trades like cosmetics, personal care and athleisure which should hold up better than the rest,” said Kevin Lam, Cushman & Wakefield’s executive director, head of retail services for Hong Kong.
Tourist arrivals in the first five months grew by 14.9 per cent – the most significant growth in nine years – with a 20.7 per cent rebound in same-day mainland visitor arrivals over the same period. However the new wave of mainlanders are spending less on luxury goods, focusing instead on more mainstream goods. While overall retail sales were down 1.8 per cent in the year to May, jewellery and watches sales were down by 4.4 per cent.
Lam said food-and-beverage store rents fell by between 0.8 per cent and 3 per cent quarter on quarter on Hong Kong Island, but improved by between 0.4 per cent and 0.9 per cent in Kowloon districts, including Tsim Sha Tsui and Mongkok.
He put the difference down to the increasing number of mainland tourists, particularly same-day visitors, who are less inclined to cross the harbour to the Island side.
Most categories of food-and-beverage spending in Hong Kong rose by between 4.8 per cent and 11.2 per cent during the early part of the year – the main exceptioin being sales by Chinese restaurants.