Hong Kong’s retail leasing market remained under pressure with rental rates far below the pre-pandemic levels, while Beijing’s crackdown on capital flight and a potential rate hike in the second half of the year by the US Federal Reserve would add to sector uncertainties, according to analysts.
The food and beverage sector has seen numerous closures of both casual eateries and high-end restaurants in recent months. Fast-food chain Maxim’s MX scaled back operations and closed its South Horizons and Dragon Centre branches in June, while Howard’s Gourmet, – a high-end Chinese restaurant and local celebrity favourite that operated for over a decade in Central – quietly shut down at the end of May.
Jeannette Chan, senior director of retail at JLL, said that overall rents for commercial street shops in Hong Kong had fallen by 74 per cent from their peak in 2014 and 44 per cent from the 2019 pre-pandemic level.
“Falling rents have triggered a wave of relocation among street-level shops in secondary and tertiary locations across Hong Kong to prime locations,” she said. “For instance, shops in Queen’s Road Central are fully occupied, whereas the vacancy rate on Des Voeux Road Central – a secondary or tertiary location – is rising.”
Restaurants in particular were facing severe pressure, according to analysts, as persistent geopolitical tensions hampered capital inflows to Hong Kong and a potential interest rate hike influenced both consumer confidence and property market performance.
“Rents for large, upper-floor commercial units in Hong Kong fell by nearly 20 per cent on average during the first half of the year,” said Liz Ling, executive director at House Property. “There are no clear signs of recovery yet in the local dining and retail sectors,” she added.
