Intense competition for limited prime-street retail space and the commitment among both established and new brands to secure prime sites and flagship spaces continue to support a high rental environment in Hong Kong.
But leasing expert Cushman & Wakefield, predicts a “mild correction” in prime retail rents in 2013.
Prime rents have stabilised and trended slightly downward after becoming the highest globally in 2012. Sales have softened and some retailers have become slightly more cautious.
Cushman & Wakefield also noted a slight shift away from luxury retail expansion to middle to high-end priced goods. In addition, more retailers are growing cognisant of the impacts of high rental costs and the impact on the bottom line.
“Retail sales performance has moderated and visitor spending shifted, so we expect retailers to be selective in their expansions and show greater resistance to pay premium rents for prime locations,” said Cushman & Wakefield senior director for retail Michele Woo.
“Nonetheless, Hong Kong does remain a springboard to the mainland China market and it will continue to lure international brands.”
Recent new brands in the city include UGG, which will open its first Hong Kong flagship in Causeway Bay in May, while American lingerie icon Victoria’s Secret is planning to open two stores at IFC Mall and New Town Plaza by mid-2013.
Folli Follie has leased two prime street shops, one on Canton Rd and another on Russell St. Hugo Boss also moved onto Canton Rd after selecting Central for its flagship, which is under construction. Beauty and cosmetics chain SaSa is reported to take over a two-storey shop on Russell St after committing to a 20,000 sqft space also in Causeway Bay.
A number of local retailers have dusted off their expansion plans and the market continued to see more international brands entering the arena with new stores and flagships.
Despite a slump in watch and jewellery sales last year, several local retailers expanded their influence in traditional retail districts in this year’s first quarter.
