As luxury brands are hit by a depressed world economy and a drop in tourists, particularly from the Chinese mainland, some of Hong Kong’s glitziest shopping precincts are likely to turn to mass-market retail.

Just four years ago, Russell St in Causeway Bay overtook New York’s Fifth Avenue as the world’s most expensive shopping street, but now shop rents there have tumbled. Other prime shopping areas have also seen retail rentals drop – between 20 and 50 per cent from 12 months ago. Luxury-brand tenants are still closing their doors in core shopping centres despite landlords cutting their rents.

Data from the Rating and Valuation Department (RVD) shows the rental value of one ground-level shop in Russell Street has nearly halved to HK$6.84 million (US$881,328), compared with the previous financial year, but a tenant has yet to be found.

For Hong Kong Island, the average monthly rent for private retail premises in January fell by about 20 per cent to HK$1430 a square metre from HK$1796 last June.

“Retail rents are expected to fall sharply because of dwindling demand in the retail market,” says Royal Institution of Chartered Surveyors committee member Frank Wong.

A Jones Lang LaSalle report says this offers opportunities for local retailers in fast fashion and lifestyle to secure prime space.