The marginal growth represents the first quarterly expansion in four years.
Retail capital values inched up 0.3% QoQ in Q1 to register the first quarterly expansion since the first quarter of 2014, according to real estate consultant CBRE, as the sector steadily regains its footing thanks to robust private expenditure levels.
Retail sales value extended its strong momentum after rising 11.4% YoY to a provisional estimate of $39.8b in March, led by strong demand for jewellery, watches, clocks and valuable gifts.
“The sustainable growth in local consumption is ensuring non-core retail assets remain keenly sought after,” the report added.
In fact, strong private consumption expenditure led GDP growth in Q1 after rising 8.6% YoY which added around 5.77 ppt to Hong Kong’s headline economic growth.
Demand for prime retail locations also rose in Q1 as brands took advantage of reduced rents to score prime sites in core areas.
“Watch and jewellery tenants were particularly active. One example is Chow Tai Fook, which rented a 1,800 sq. ft. ground floor shop in Tsim Sha Tsui and also renewed the lease on its premises in Causeway Bay,” CBRE Hong Kong senior director for retail advisory and transaction services Lawrence Wan said in an earlier report.
Overall high street rents inched up marginally by 0.3% QoQ in Q1. Vacancy is poised to fall further with Central remaining crowded as retailers seek flight-to-quality options. The completion of 3.6m sq ft of shopping centre supply, the highest annual total on record, is also projected to offer a broad range for brands eager for retail space.
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