Causeway Bay retail rents slipped 13.9% in 2019

Some international retailers closed their shops amidst unrest.

Retail rents in Causeway Bay dropped by 13.9% to HKD 1,520 per sq ft in 2019, the lowest level in a decade, according to a report by Cushman & Wakefield. In Q4, rents in the area slipped 8.5% QoQ.

“Causeway Bay continued to suffer the most as some international retailers decided to close their shops in the area amidst the ongoing social unrest,” the report noted.

Led by plummeting retail sales and tourist arrivals, rents across all districts declined for the second consecutive quarter. The disruption to businesses continued to see rents in Yuen Long and Tuen Mun dropping by 8.6% QoQ and 5.4% QoQ, respectively.

Amidst ongoing social unrest, Mainland Chinese visitor arrivals plunged a record 58.4% YoY in November. As a result, overall visitor arrivals fell to 2.6 million for the month, the first time the number hit below three million since February 2011.

Overall retail sales crashed 23.6% YoY, largely driven by a decline in jewellery & watches and cosmetics sales, which contracted 43% YoY and 33% YoY in October and November, respectively. Both traditionally were heavily supported by mainland visitors.

Rentals in Causeway Bay are projected to contract 10-12% in H1 2020, whilst those in Central, Tsimshatsui and Mongkok are tipped to drop 5-10%. The report noted that all major retail districts are expected to retreat by 10-15%.