Prime retail rents set to slide up to 10% in 2026, report warns

JLL forecasts high street shop rents to soften by 0–5%.

After a stronger-than-expected end to 2025, the outlook for Hong Kong’s real sector in 2026 is considerably more cautious, particularly for landlords.

JLL forecasts high street shop rents to soften by 0–5%, a relatively mild correction, but prime shopping centre rents face steeper pressure, projected to fall 5–10%.

The divergence reflects structural headwinds in larger malls even as experiential and "instagrammable" formats help sustain foot traffic.

Vacancy is the clearest near-term concern. High street vacancies have already climbed to 10%, with performance splitting sharply across districts: Central and Causeway Bay are stabilising, whilst Tsim Sha Tsui and Mongkok continue to deteriorate.

For investors, the implication is a yield-first strategy. With rents declining and negative rental reversions likely on lease renewals, JLL expects capital to concentrate on assets offering 6–7% initial yields — the cushion needed to make the math work.

McDonald's disposal of owner-occupied assets, with yields ranging from 4.8% to 7.3% on completed sales, gives the clearest recent read on where pricing is settling.

The upside scenario depends on whether the momentum in electronics and securities-linked spending — both strong in late 2025 on the back of an active stock market — carries into the new year.