HONG KONG – As Hong Kong grapples with a worsening retail slump, business sentiments in non-prime shopping areas, particularly in Kowloon and the New Territories, have been hit the hardest, according to data from the city’s leading real estate brokers.
In the second quarter of 2024, average monthly rents for shopping malls on Hong Kong Island remained stable after a decline in the previous quarter, as indicated by a retail rental index compiled by commercial real estate agency Savills Hong Kong.
While prime locations on Hong Kong Island have managed to maintain rent levels, areas in Kowloon and the New Territories are experiencing more significant downturns. This disparity highlights the critical importance of location in Hong Kong’s retail landscape.
Real estate experts suggest that while prime areas benefit from sustained foot traffic and tourist interest, secondary locations are struggling with reduced consumer spending and lower visitor numbers. This trend underscores the resilience of prime retail areas compared to their non-prime counterparts amid broader economic challenges.
The overall retail environment in Hong Kong faces pressures from declining local consumption and shifts in shopping behavior, with consumers increasingly favoring online shopping. Retailers in non-prime areas are particularly vulnerable to these shifts, as they lack the high foot traffic and visibility of prime locations.
For businesses and investors, the prevailing conditions suggest a need to focus on prime locations to navigate the current retail slump. Non-prime areas may require innovative strategies and potentially lower rental expectations to attract and retain tenants.
In conclusion, the current retail downturn in Hong Kong underscores the adage that in real estate, location is indeed king. As the market adjusts, the resilience of prime shopping areas may offer some stability in an otherwise challenging landscape.