Prime Hong Kong real estate is likely to see an exodus of retailers throughout 2021, according to new research by property firm Savills.
With the impact of a year filled with protests and a pandemic leaving little cash for expansion, many retailers are likely to wait out the terms of their leases and “hand back the keys” when the opportunity arises.
International brands, too, are expected to step away from Hong Kong and instead put more focus on the Chinese mainland.
As a result, prime real estate rents in Hong Kong are expected to continue a steady decline throughout 2021, falling by as much as 2 to 5 per cent, with landlords looking to food and beverage businesses to fill the gap and encourage shoppers back to their properties.
Retail sales values fell 8.8 per cent in October – the first month that didn’t see a double digit decline in 15 months – and landlords have been increasingly turning to ‘turnover-only’, year-long leases to entice businesses to stay or open up in vacant positions.
“While rents may continue to slip over the first half of this year, we can see some activity returning after Chinese New Year with a market turnaround likely in 2022,” said Savills senior director of research and consultancy Simon Smith.
Savills predicts rent values will rebound 10 per cent in 2022, though this assumes a return to normality for the market.