Leasing activity in Hong Kong has slowed in the past two months as mainland tourist arrivals drop.
Senior regional sales director Pat Wong of Centaline Property Agency said while most luxury retailers in Hong Kong still vie for prime locations, they have downsized their stores from an average 500 sqft to 300 sqft.
“You can tell there’s been a slowdown in leasing as an increasing number of shops in second- and third-tier locations have remained empty for quite some time,” he added.
Hong Kong’s total retail sales in April, according to Census and Statistics Department, declined 9.8 per cent, its third drop in thee consecutive months after 1.3 per cent decrease in January and 2.2 per cent in February.
Many luxury foreign retailers turned cautious including Swiss company Swatch, which according to a report by South China Morning Post, signed a deal with Tai Hung Fai Enterprises to rent 1600 sqft space in Sai Yeung Choi Street, Mongkok, but cancelled it in favour of a smaller 250 sqft in Sim City, Mongkok.
“Luxury stores used to be aggressive. But now, as mainland tourists shift to mid-range consumption, pharmacies, cosmetics and fast fashion are active,” said Joe Lin, executive director of CBRE Retail Services.