, Hong Kong

Retail profits may rise by at least 36% over the next 12 months

Thanks to falling retail rents.

Maybank Kim Eng notes that leases that were up for renewal have fallen as much as 41% over the past two years, based on Bloomberg data. CBRE and Colliers expect HK retail rent to fall further, in the low single digits this year, while Savills said the current adjustment cycle looks to have overshot.

This suggests there is still room for retailers to negotiate better terms this year. According to Bloomberg consensus, retail profits may rise by at least 36% on average over the next 12 months as more savings are generated by retailers.

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