CBRE publishes the Hong Kong Retail MarketView Q3 2015.
Joe Lin, Executive Director, Retail Services, CBRE Hong Kong commented, “The top tier retail market deteriorated in the third quarter. The shift in mainland Chinese tourist spending patterns coupled with slower tourist arrivals continued to erode confidence among luxury retailers. This resulted in more cases of lease surrender and rental cuts for tier one street shops by jewellery and luxury retailers. We expect the rental downcycle to continue in Q4.”
CBRE Outlook Q4 2015
- More surrender or consolidation cases among luxury
retailers
will be expected in the coming quarters
- Average rents for space in core retail locations will
continue to decline
in Q4, with the full year rental downward adjustment for 2015 projected at
around 20-25%
- Non-luxury retailers are set to be the main driver of
retail leasing demand in Hong Kong
- Leasing transactions signed over the past two quarters at lower rents in
tier one streets will set new benchmarks for lease negotiations in the coming
months
CBRE Highlights Q3 2015
- Total
retail sales in July and August combined, fell by 4.2% y-o-y. Watch and
jewellery sales dived by 7.0% y-o-y in July and August combined
- There
were more cases of luxury brands and high-value retailers surrendering leases
on tier one streets in Q3 2015
- Overall
rents in core locations slumped 9.1% q-o-q, the largest quarterly decline
recorded since 1998. Among the four core submarkets, rents in Causeway Bay fell
most severely by 11% q-o-q in Q3 2015, bringing the y-t-d decline to 22%
- Rents
in Central, Tsim Sha Tsui and Mong Kok declined by 9.2%, 7.0% and 7.6% q-o-q,
respectively
- Mid-range
retailers are attempting to regain their foothold in prime locations. Cosmetics
retailers, sportswear brands and fitness centers were the most active sectors
in Q3
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