Hong Kong retail market struggles amidst economic pressures

It faces increased competition from major Chinese e-commerce giants.

Hong Kong's retail market continues to experience significant challenges, with a persistent decline in retail sales partially driven by the early arrival of Lunar New Year, according to Knight Frank.

The local retail sector is also facing increased competition from major Chinese e-commerce giants like JD.com and Alibaba, which are expanding their presence in the city.

JD.com is set to launch a new JD Mall, focused on home appliances, while Alibaba has opened its first physical store in Tsim Sha Tsui. Whilst these developments expand consumer options, they also pose challenges for local retailers struggling to keep up with the growing influence of online shopping platforms.

The Hong Kong Super March events helped boost visitor arrivals to the city. In March, over 3.4 million visitors arrived, marking a 12% year-on-year increase. This included 960,000 overseas tourists, with hotel occupancy rates in prime districts nearing 90%.

Leasing activity on prime retail streets has shown signs of recovery, though retail rents continue to face downward pressure due to the ongoing decline in sales.

Looking ahead, the retail market in Hong Kong is expected to slow as retailers remain cautious in response to global economic uncertainties and stagnant local economic growth.

To retain tenants, more landlords are lowering rents, even for renewals, which could further drive down retail rents and dampen investment in commercial real estate.