CBRE today launches the Hong Kong Retail MarketView 2Q14. Below are key findings. For more information or to arrange an interview contact karen.ho@cbre.com.hk / 2820 8108.
Mr. Joe Lin, Executive Director, Retail Services, CBRE Hong Kong stated that the retail market is undergoing potential rental correction. “Hong Kong’s retail market has been perturbed by a fall in retail sales for four months in a row, down by 4.1% y-o-y in May. Coupled with the dampening leasing demand for secondary locations, the overall market sentiment is not positive. The retail market is expected to have a rental correction with tier-1 rents remaining stable, while tier-2 rents could drop by up to 15% over the year. There is a potential for both retailers and landlords to regain confidence in the market by the beginning of 2015 with retail sales approaching more sustainable levels.”CBRE Outlook for Retail 3Q14
- Prime street shop landlords will remain reluctant to lower their rents, while secondary street landlords have softened their stance during rental negotiations, lowering their asking price considerably
- In the coming quarters, international, aspirational and mid-range retailers will drive the demand for new space, in response to the growing demand from mainland shoppers for mid-to-lower priced goods
- Secondary streets will face growing competition from prime shopping centres as retailers show more preference to malls which offer attractive rents and footfall
CBRE Highlights for Retail 2Q14
- Overall prime high street retail rent dampened with a drop of 0.3% from the previous quarter, the first quarterly decline since the end of 2008
- Causeway Bay saw its first negative rental growth of -0.6% q-o-q since 2009. Tier-1 street rents dropped by 1.4% q-o-q, showing landlord’s willingness to adjust rents. The fall in rents, however, was only noticeable in fringe locations
- There was no apparent slowdown in demand from mass market retailers; cosmetics and footwear retailers as well as pharmacies, for instance, remained active in securing retail space, while that of luxury retailers softened
- The possible new regulations to control mainland Chinese arrivals and a possible reduction of tourist arrivals by up to 20%, though subject to be confirmed, have implied a shift in mainland Chinese demand. Retailers are now facing the reality of the changing profile from those shoppers, who seek attractive promotions and lower-priced brands
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
