High-street shop vacancy rises to 16.5% in Q2 22
Amongst core districts, Tsim Sha Tsui had the biggest vacancy rate.
High-street shop vacancy rose 1.3 percentage points from Q122 to hit 16.5% in Q2 22, data from CBRE showed.
The increase in vacancy was likely due to some landlords, who are under limited financial pressure, opting to leave units vacant rather than renting them out.
This practice was most evident in Tsim Sha Tsui and Mong Kok where vacancy rates were the highest, at 23.2% and 18.9%, respectively.
Whilst vacancy rose during the quarter, rents remained flat. According to CBRE, rents were unchanged from Q122 because “cash-rich landlords with strong holding power prevented some units from transacting at lower rents this quarter.”
In addition to rents being unchanged, leasing volume also increased in Q2, signalling an improvement in the retail property sector.
“Improved retailer sentiment underpinned an increase in transaction volume, although many deals signed this quarter involved short-term leases,” CBRE commented.
CBRE said the stronger consumption demand in Q2 was due to the relaxation of social distance measures and support from the government's latest round of the Consumption Voucher Scheme.
Looking ahead, CBRE said demand for shops will pick up further in H2 2022 should Hong Kong’s COVID situation continue to stabilise and should cross-border travel resume.
CBRE, however, warned that a “higher mortgage burden as a result of interest rate hikes might prevent a strong rebound in discretionary consumption, ensuring only a steady retail market recovery.”