Hong Kong Retail MarketView Q2 2015
• Retail market sentiment weakened, with total retail sales falling further in Q2 2015. Sales of watch and jewellery items continued to decline the most.
• Declining sales continued to negatively impact retail leasing demand in Q2 2015. Luxury brands remained cautious towards expansion and the period saw several jewellery brands attempt to surrender space.
• The pool of affordable tenants is shrinking and is putting more pressure on landlords, many of whom are turning more flexible towards asking rents as they seek to avoid vacancy.
• There were, however, mid-range fashion brands leasing some of the spaces recently made vacant by watch and jewellery stores.
• Street shop rents in Causeway Bay suffered the biggest decline in Q2 2015, while those in Central and Mong Kok fell more modestly. Rents in Tsim Sha Tsui were flat.
• H2 2015 will likely see rents decline more significantly than in H1 2015 as deals agreed at lower rents in recent quarters have set new benchmarks for future negotiations.