High-street shop vacancy improves to 14.4% in Q3: CBRE

Causeway Bay vacancy hit single-digits for the first time since Q1 2020.

Vacancy in high-street shops declined by 1.8 percentage points in the third quarter to 14.4%, compared to the previous quarter as market sentiment improved after the government removed hotel quarantine restrictions for inbound travellers.

In a report, CBRE said Causeway Bay vacancy dipped by 2.6 percentage points quarter-on-quarter (QoQ) to 9.2% for the first time in single digits since the first quarter of 2020. Tsim Sha Tsui and Mong Kok vacancies fell by 1.4 percentage points and 2.3 percentage points to 21.7% and 16.6% respectively.

High-street rents are also recovering from the “longest-ever downcycle,” improving by 2.9% QoQ across core districts, the fastest increase since the first quarter of 2022. CBRE noted that the food and beverage sector is the key to driving leasing demand during the period.

Lawrence Wan, Senior Director, Advisory & Transaction Services – Retail, CBRE Hong Kong, said contributing factors to the boosted consumption sentiment include the easing quarantine requirements, improving labour market conditions, and the government’s consumption voucher scheme.

“Retail market sentiment continues to gradually recover.  Retailers are already planning ahead for the festive season and the rebounding tourist arrivals in the fourth quarter. Vacancy is set to edge down further, possibly supporting mild rental growth for the remainder of the year,” Wan said. 

“The higher household burden stemming from interest rate hikes and the growing intention for outbound travel, however, will prevent local consumption from experiencing a sharp rebound,” he added.

Hong Kong’s domestic consumption kept a steady growth during the period, with total retail sales rising by 2.0% year-on-year in July and August combined on the back of the government’s consumption voucher scheme.