Retail market sentiment deteriorated in Q2 2019 under the impact of domestic political disputes and the U.S.-China trade conflict. Total retail sales declined by 2.9% y-o-y in April and May combined, the largest quarterly fall since Q4 2016.
Most new leases signed this quarter were by mid-range retailers in categories such as personal care and sporting goods. Luxury retailers remained cautious towards expansion.
Overall high street shop rents remained largely stable in Q2 2019, edging down by 0.1% q-o-q. Rents in Central declined by 0.4% q-o-q. Shopping mall rents were flat.
CBRE expects retailers to refrain from expansion until there is an improvement in retail sales and the political situation. Leasing activity is therefore expected to weaken further in the short term.