Hong Kong rents sit 60% below pre-covid peaks

Tier one tourist corridors dominate demand while second and third tier retail zones face stagnant leasing growth.

Retailers are returning to Hong Kong’s street-level shopping districts as rents remain 50% to 60% below pre-pandemic peaks, creating lower-cost expansion opportunities even as the broader retail property market remains uneven.

Kathy Lee, Head of Research and Retail Consultancy at Colliers, said the reopening of borders and recovery in tourist arrivals are pushing brands to secure prime street locations while rents remain heavily discounted.

“Hong Kong is welcoming back a lot of tourists from around the world, including Mainland China and other parts of Southeast Asia and the Middle East as well,” Lee said.

According to Lee, retailers view the current market as an opportunity to expand customer reach without paying the high occupancy costs seen before COVID-19.

“So it's a very attractive, value-for-money space for retailers who would like to have new network expansion on the street to expand their customer footprints,” Lee said.

The latest leasing cycle is also being driven by a different tenant mix than before the pandemic. Prior to COVID-19, luxury brands, jewellery retailers, and watch shops dominated prime high-street locations because they could absorb significantly higher rents.

The current market instead is seeing stronger activity from banks, securities firms, food and beverage operators, and souvenir retailers targeting returning tourists.

Lee said these businesses operate with lower rental affordability than luxury retailers, limiting how quickly rents can rebound.

The discussion also highlighted that lower vacancy rates do not yet signal a full retail market recovery. Demand remains concentrated largely on first-tier tourist streets, whilst second-tier and third-tier retail corridors continue facing weaker leasing demand.

“We expect the recovery will still be focusing on this area only,” Lee said.

According to Lee, landlords outside core tourist districts may continue facing slower rental growth as retailers remain selective about expansion locations.

Despite those pressures, Colliers said the recovery appears relatively stable because tourist arrivals and retail sales have continued improving in recent months.

Lee added that the Hong Kong government is actively supporting retail demand through large-scale concerts, international sports events, and tourism campaigns designed to rebuild visitor traffic and local spending.

Colliers expects street-level retail rents to rise around 5% to 10% this year, although most gains are likely to remain concentrated in prime tourist-focused shopping corridors rather than the broader retail market.