CBRE today launches the Hong Kong Retail MarketView 2Q14. Below are key findings. For more information or to arrange an interview contact [email protected] / 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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