Prime street shop leasing market hurt by sluggish luxury retail sales

Capping any short-term potential rental growth.

The poor performance of luxury retail sales began to filter through to the prime street shop leasing market, capping any potential rental growth in the short run.

According to a research report from Savills, two shops on Nathan Road which were originally leased by the same jewellery brand were vacated recently.

The one in an inferior location in Yau Ma Tei remained vacant even with a small monthly rental reversion from HK$800,000 to HK$1 million, while the other one, which is in a better section of Nathan Road in the heart of Tsim Sha Tsui, was subsequently leased to a cosmetics retailer for HK$1.95 million per month.

The prime street shop sales market was adversely affected, with transactions hard to come by.

Here’s more from Savills:

One significant deal in a core retail area was the sale of a portion of the B/F of Star House in Tsim Sha Tsui for HK$1.18 billion by way of company transfer.

With the suburban retail story now well established and with many international retailers already expanding into suburban malls in fringe Kowloon and the New Territories, investors finally woke up and followed suit on a respectable scale.

The Link successfully sold four of its shopping centres in Aberdeen, Shau Kei Wan, Lam Tin and Kwai Chung to two groups of investors for a combined HK$1.2 billion.

East Plaza, the retail portion of Legend Tower in Kwun Tong, was also sold to an investor for HK$1.0 billion.