Hong Kong retail spaces still being leased at 30% lower than pre-COVID levels

Find out which spaces are being rented at lower prices.

The number of visitor arrivals in Hong Kong between January and February 2023 increased YoY, from just under 10,000 to 1,960,658. About 71% of visitors were from the Chinese Mainland. However, retail rents have yet to benefit. 

According to a Knight Frank report, although drugstores have returned to the major streets in Tsim Sha Tsui, Causeway Bay, Mong Kok and Sheung Shui after three years, they are being rented at an average 30% lower than pre-pandemic levels according to market sources. 

Here’s more from Knight Frank:

For instance, a ground floor shop in 14-16 Canton Road (1,000 sq ft) was leased to a drugstore for a monthly rent of HK$500,000. Formerly, this shop was leased to Puyi Optical, a high-end optical brand, which paid HK$2.3 million per month. Amid the rebound in visitor arrivals, at least two leasing transactions of drugstores in Canton Road were recorded this year. 

EuroEyes International, a provider of orthoptic services, leased a 7,188 sq ft unit. The unit comprises the ground floor (2,000 sq ft) and 3rd floor shop at 2 Russell Street (5,188 sq ft). According to market sources, the monthly rent is about HK$800,000. Previously, the shop was leased to Prada, a luxury brand, as a flagship store, at a monthly rent as high as HK$9,000,000, representing a 90% rental reduction for the new lease. 

Looking ahead, the government rolled out a new round of consumption vouchers on 16 April, but we believe its effect on stimulating the economy will be limited. We don’t expect retail sales in April to increase as much as they did in March, as many residents travelled abroad during the Easter holiday. Overall, we maintain our cautiously optimistic market outlook and expect retail rents to remain flat during 2023 until the majority of vacant space is occupied.