Hong Kong retail leases soar as Tsim Sha Tsui leads with a 60% surge

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New Mandarin Plaza

26th February 2024 – (Hong Kong) In the wake of a post-pandemic resurgence in travel, Hong Kong’s retail leasing market has witnessed a significant upturn, led predominantly by Tsim Sha Tsui, which experienced an astonishing 60% year-on-year increase in transactions.

The return of overseas and Mainland visitors has breathed new life into the local market, with core shopping districts registering approximately 1,307 shop lease transactions amounting to over HK$229 million. This marks a substantial uptick from the pandemic outbreak period in 2022, with an 18.9% rise in transactions and a 15.3% increase in transaction value.

Tsim Sha Tsui, a prime shopping and tourist destination, stood out impressively with around 420 transactions—an increase of approximately 158 deals from the previous year. The leasing transaction amount in this district exceeded HK$82.4 million, up by HK$26.4 million, showcasing a growth of 47.1%.

Central followed, with around 207 transactions, up by 19% from 2022. The total transaction value in this district saw the most significant increase among core areas, rising by about 62% to HK$38.85 million.

Mong Kok also saw a steady rise with approximately 463 transactions, up by 12.7%, and a total value exceeding HK$58.13 million, an increase of more than HK$11.82 million or 25.5%.

Conversely, Causeway Bay, traditionally known for commanding some of the world’s highest retail rents, experienced a downturn. The district saw a decline of about 35 transactions, marking a 13.9% decrease, with the total transaction value plummeting by 35% to over HK$43.54 million.

Recent years have seen a dearth of major international brands setting up shop in Causeway Bay. In contrast, Tsim Sha Tsui has not lacked significant leasing cases. Notably, the Science Museum Road’s New Mandarin Plaza leased its ground floor and basement, totalling around 56,000 square feet, for approximately HK$1.4 million last month, intended for entertainment uses.

Mong Kok has been popular among mainland Chinese chain restaurants, with one such establishment renting a part of the ground floor in Chung Hing Square on Nathan Road for a monthly rent of about HK$268,000. Causeway Bay’s high rent levels have traditionally catered to large brands and luxury retailers. However, the decrease in luxury consumer spending and changes in mainland tourist spending habits have led to a significant decline in demand for leases in the area.

In contrast, Tsim Sha Tsui has seen a diversification of tenants, including food and fashion retailers, which has significantly boosted leasing transactions in the district.

The expansion of individual travel schemes from Mainland cities to Hong Kong is expected to further stimulate the retail markets in core areas, with transaction volumes projected to increase by 20 to 30% and rents to rise by approximately 5 to 10%. While international brands may remain cautious in leasing, the trend of mainland brands making inroads into the market is set to continue.