Retail street rents to decline 10-15% YoY in 2023

Retailers are not optimistic about the sector’s outlook, according to Knight Frank.

Hong Kong’s retail street rents are expected to decline by another 10% to 15% year-on-year as the retail market is not showing signs of “bottoming up” this year, according to Knight Frank.

Helen Mak, senior director, and head of Retail Services, said the market’s retail sector remained weak despite the new electronic consumption vouchers from the government. It is also unlikely for the government to relax further its entry quarantine restrictions to 0+0 and reopen the border with the Chinese mainland due to new COVID-19 outbreaks.

Due to this, monthly retail sales value is expected to be below $30b in the short term.

READ MORE: Retail sales value edges up by 3.9% YoY in October      

“Retailers are not optimistic about the market outlook, with only a small number of retailers in the F&B and necessity sectors considering opening new shops. Further rent adjustments will not significantly improve the vacancy rate,” Mak said. 

“If the Chinese mainland border reopens, it will encourage retailers to reopen or expand their retail outlets. Only then the vacancy rate will fall, and the retail landscape will be dominated by experiential consumption,” she added.