Retailers are burdened by leasing costs as high as $20,864 annually.
Nearly eight in ten (79%) Hong Kong’s retailers identified rising rents as the top major challenge for the industry, whilst 80% of retailers struggled to attract or keep employees due to unfavourable work conditions, a survey by advisory firm KPMG and the Hong Kong Retail Management Association (HKRMA) revealed.
Private retail rents have steadily increased over the last three years, with monthly rents psm averaging at $1,499 in 2016, $1,518 in 2017, and $1,526 in 2018, in Hong Kong island alone.
A separate study by Cushman & Wakefield revealed that Causeway Bay holds the distinction as the world’s most expensive where leasing costs are at a whopping $20,864 sqft/annually. In comparison, the most affordable APAC retail location is Chennai’s Ambattur (MTH Road) in India where leasing costs are at a measly $117 sq/ft annually.
Only recently were retail rents forecasted to slip, with high street rents down 0.1% in Q2 and projected to decrease 5% over the remainder of 2019 in response to weaker buying sentiment whilst shopping mall rents were projected to remain flat.
Meanwhile, 53% of retailers cited talent shortages as their most pressing concern, whilst 48% lamented high staff turnover.
Survey findings revealed that four in 5 retailers cited the unfavourable job nature, such as undesirable working hours, working on public holidays, and long hours of standing, as the top reasons for the workforce shortage. Unattractive wages came in second at 68%, followed by the low unemployment rate at 62%.
Over half (51%) of the respondents also noted that the unclear career path and future options, as well as the inadequate number of graduates with retail management knowledge, as other causes for the shortage.
A recent government report on manpower projected that Hong Kong could face a shortfall of as many as 250,000 workers in 2027 as the number of tourists in Hong Kong eclipse the number of people who work in the retail industry.
Hong Kong’s retail sector accounts for about 4% of the island’s GDP, according to KPMG and HKRMA.
The report surveyed 281 companies dealing in fashion and accessories, health and beauty products, department stores, drug stores, electronic and electrical appliances, supermarkets, watches and jewellery, cosmetics and other areas.
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