In the third quarter of 2024, Hong Kong’s key business hubs witnessed a spike in street shop vacancies, reaching 11.7 percent, the highest level in more than three years, according to Hong Kong real estate agency Midland IC&I.
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The latest data revealed a total of 874 unoccupied shop spaces across the four primary commercial enclaves – Causeway Bay, Central, Tsim Sha Tsui, and Mong Kok – in the third quarter of this year, showcasing a notable uptick of 154 vacancies compared to the previous six-month period.
The surge was attributed to factors including a sluggish F&B sector and heightened competition arising from the influx of mainland brands into the market.
Non-Chinese eateries, in particular, dropped from 609 to 557 establishments.
Midland projects that vacancy rates are likely to persist between 11.5 percent to 12.5 percent through the first quarter of 2025.
Hong Kong’s retail sector faced a challenging environment in July as total retail sales witnessed an 11.8 percent year-on-year decline, due to slower recovery of inbound tourism and subdued tourist spending.
Categories such as jewellery, watches and clocks, and valuable gifts and department stores bore the brunt of the downturn, experiencing significant drops of 25.0 percent and 24.3 percent, respectively.
While inbound tourism stood at 3.9 million arrivals, around 71.8 percent of pre-pandemic figures from July 2018, the first half of 2024 saw a decline in per capita tourist spending, with shopping expenditures plummeting by 38.1 percent and dining receipts decreasing by 22.9 percent compared to the same period in 2023.
In an effort to boost Hong Kong’s position as a nightlife and dining destination, Hong Kong will reportedly lower taxes on spirits, a development that is expected to be announced during Hong Kong chief executive John Lee’s policy address in October.
International brands are strategically taking advantage of lower retail rents in Hong Kong. According to JLL, Giorgio Armani has secured a shop unit spanning 10,261 square feet at the Galleria in Central, while Mango leased a 19,075-square-foot space at Asia Standard Tower in Central at a reduced rate compared to its predecessor, Topshop. Additionally, Prada is set to unveil a new store in an 8,000-square-foot space at K11 Musea in Tsum Sha Tsui.
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Consumer spending trends in Hong Kong continue to demonstrate a shift towards mainland China, as restaurants, hotels and supermarket chains in Shenzhen and other mainland cities lure Hong Kong shoppers with lower prices.