As a result, non-luxury retailers are moving on in core areas outside Central.
Non-luxury retailers are expected to drive the retail leasing market over the coming months as posh brands hold off their expansion plans in response to weakening sales, according to property consultant Knight Frank.
Retail sales for the luxury segment fell 2.7% in May, reflecting the overall weak performance of the sector that has been bearing the brunt of heightened economic uncertainties and the recent political upheaval.
Knight Frank cites a 4,000 sq ft street-front shop at Yu To San Building on Queens Road Central that was previously occupied by a luxury jewellery company and is now leased to a sports brand for a monthly rent of $1.4m, or $350 per sq ft. The leasing cost reportedly represents about 30% lower than the peak level rent.
“With most of the luxury sector’s physical expansion slowing down, some non-luxury retailers are seizing the opportunity to take up space in the core areas outside Central,” Knight Frank said in a report, citing Japanese eyewear brand Owndays which is planning to open its first two stores on Hong Kong Island, at Hysan Place in Causeway Bay and Lee Tung Avenue in Wan Chai. New York’s Museum of Modern Art is also preparing to open its 6,000 sqft space at K11 Musea in Tsim Sha Tsui in its largest design store outside Japan.
As a result, Knight Frank expects prime street shops to fall 5-10% by end-2019 although rents for shopping malls are expected to stabilise.
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