, Hong Kong
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HK’s retail leasing momentum slows as vacancy falls: report

All four core districts recorded single-digit vacancy rates for the first time since Q2 2018.

Hong Kong's retail leasing sector saw a slowdown in momentum, partly due to declining vacancy rates, as per CBRE Hong Kong’s 2024 Q1 Market Review.

Despite this, the report said that retail sales and visitor arrivals continued an upward trajectory, although at a reduced pace compared to previous periods.

Following a robust 16.2% year-on-year (YoY) growth throughout 2023, total retail sales saw a more modest increase of 0.9% YoY in January and 1.9% in February, marking the fifteenth consecutive month of growth.

Expansionary leasing demand played a significant role in driving down vacancy rates, which dropped by 2.5 percentage points quarter-on-quarter (QoQ) to 6.6%, reaching the lowest level since Q4 2019. 

All four core districts recorded single-digit vacancy rates for the first time since Q2 2018. Central experienced the sharpest decline, with vacancy falling by 5.3 percentage points to 6.6%. 

Tsim Sha Tsui and Mong Kok also saw decreases, with vacancies dropping by 2.9 and 2.3 percentage points, respectively, to 5.8% and 7.4%. Meanwhile, vacancy rates in Causeway Bay remained unchanged.

“The vacancy across four core districts dipped to the single digits, thanks to the active leasing activities over the past few quarters. The leasing momentum has softened in Q1 2024 due to the reducing options on high streets,” said Lawrence Wan, Senior Director and Head of Advisory & Transaction Services – Retail at CBRE Hong Kong.

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Whilst sectors such as food and beverage and luxury retail showed signs of slowing expansion, entertainment-related retailers remained active during the quarter.

The decrease in vacancy rates contributed to a 2.7% QoQ increase in high-street shop rents, the fastest growth since Q3 2022.

“Retailers are expected to carefully assess the recovery of Hong Kong’s inbound tourism and with the government’s efforts in launching more international events, the outlook is bright,” said Wan.

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