Retail rents under pressure as sales dip in May

Prime retail street rents, however, have gained momentum.

Rents remained under downward pressure as retail sales dipped further in May. Rents on prime retail streets, however, have gained momentum.

Notable leasing transactions include On, a Swiss performance shoe brand, launching its first Hong Kong flagship store at G/F, Shop 2, H Queen’s, Central. Thecomm 3,684 sq ft store will rent for $600,000 monthly.

Other transactions include Falconeri leasing a 1,700 sq ft shop in Parker House, Central, for $400,000 per month, and Nike leasing a 1,700 sq ft shop in Pacific House for the same amount.

Meanwhile, retail investment sales have slowed due to limited rental growth potential and shop owners' reluctance to lower prices to maintain attractive yields.

Retailers also reported disappointing sales during Golden Week 2024 due to lower visitor spending, a weak Chinese yuan, and China's slow economic recovery. Market challenges have led to a business downturn, prompting retailers to scale back expansion plans in 2024.