Hong Kong high-street shop vacancy reaches 16.5% in Q2

Vacancies also increased in Tsim Sha Tsui and Mong Kok.

A CBRE report recently revealed a trend that causes retail vacancy rates to rise in Hong Kong: financially-pressured landlords are opting to leave units vacant instead of renting them out. 

As a result, high-street shop vacancy climbed 1.3-ppt q-o-q to 16.5% in Q2 2022. The trend was most evident in Tsim Sha Tsui and Mong Kok, where vacancy increased by 2.9-ppt q-o-q to 23.2% and 18.9% respectively.

Here’s more from CBRE:

Cash-rich landlords’ strong holding power prevented some units from transacting at lower rents this quarter, ensuring high-street shop rents remained flat. However, the sharp rental decline in Q1 2022 led to a 5.9% fall in high-street shop rents in the first half of the year.

Lawrence Wan, Senior Director, Advisory & Transaction Services – Retail, CBRE Hong Kong: “Following the relaxation of social distancing measures and the distribution of the new round of e-consumption vouchers in April, retail sentiment improved in Q2 2022. Leasing volume climbed in Q2 2022, making H1 2022 the most active period since the outbreak of COVID-19. Should Hong Kong’s COVID-19 situation continue to stabilise and should cross-border travel resume, retail market sentiment and hence demand for shops will pick up further in H2 2022. However, higher mortgage burden as a result of interest rate hikes might prevent a strong rebound in discretionary consumption, ensuring only a steady retail market recovery.”