Hong Kong retail landlords are expected to be more flexible with lease terms as the market continues to recover, says real-estate consultancy Knight Frank.

With four consecutive months of positive growth, retail sales value rose another 0.1 per cent year on year in June.

Visitor arrivals during the first half of the year were up 2.4 per cent, led by 2.3 per cent growth in visitors from the Chinese mainland.

“Rental levels for prime street retail stores in different districts have mostly undergone adjustments,” says Knight Frank.

“Recognising that extra capital cost is needed to recruit new tenants and at the same time to avoid the risk of having empty shops for an extended period, landlords are now willing to make more adjustments during negotiations.

“Following the stabilisation in overall retail sales, we expect to see more realignments for retail stores in the comings days.”

The company believes the retail rental market is on track to bottom out before the end of the year.