Buoyed by the recovery of the retail sector, shop vacancies in Hong Kong’s four main shopping districts reached a three-and-half-year low in the first quarter of 2024, with the food and beverage sector remaining the main tenant, according to research released on Monday.
The research, conducted by real estate agency Midland IC&I, found 720 vacant shops in Causeway Bay, Tsim Sha Tsui, Mong Kok, and Central in the first quarter, a decrease of 26 shops on a yearly basis, the lowest level since the third quarter of 2020.
But in the food and beverage sector, we anticipate a challenging landscape where the principle of “survival of the fittest” will come into play, as continuous expansion in recent years means businesses in this sector find themselves in intensified competition, Lo (Tony Lo Chin-ho, CEO of Midland IC&I) added
“As the retail industry gradually recovers from the lingering impact of the COVID-19 pandemic, retailers have seen signs of improved turnover, promoting them to seize the opportunity to open stores in bustling shopping areas,” Lieman Leung, director of the property agency, said.
ALSO READ: HK to update children’s growth charts as youths become taller, heavier
According to government data, retail sales in 2023 increased by nearly 15 percent on a yearly basis, and sales in the first two months of this year expanded around 1.4 percent compared to the same period last year.
The number of retail stores in the four shopping districts increased in the first three months compared to the same period of 2023. Pharmacies showed the most significant growth, with a rise of 43 to the current 228.
The dining industry continues to thrive, with 2,057 restaurants now gracing the four commercial districts. This marks an increase of 41 compared to the third quarter of 2023, the last research round of Midland IC&I. Chinese restaurants led the way, with 36 new restaurants, raising the total number to 683.
The surge in Chinese restaurants can be attributed to a growing number of Chinese brands venturing into the Hong Kong market, the research said. “These brands view Hong Kong as a gateway for expanding their global footprint.”
READ MORE: HK holds recruitment events in UK to attract overseas medical talents
Meanwhile, the districts of Yuen Long and Sheung Shui, which are near the Chinese mainland, saw a slight uptick in vacancy rates of around 2 percentage points during the first quarter of 2024, impacted by a growing number of residents traveling to mainland cities for shopping, according to the research.
The real estate agency predicts that the vacancy rates of shops in the core districts will remain at their current levels in the coming six months.
“Given the projected steady growth of the Hong Kong economy this year, we believe there is still room for recovery in the retail sector, which will provide support to the commercial property market,” said Tony Lo Chin-ho, executive director and CEO of Midland IC&I.
READ MORE: Equity market rebounds on CSRC’s push to cement HK as international finance center
But in the food and beverage sector, we anticipate a challenging landscape where the principle of “survival of the fittest” will come into play, as continuous expansion in recent years means businesses in this sector find themselves in intensified competition, Lo added.
The research forecasts that commercial property prices will remain stable throughout the year amid a prolonged high-interest-rate environment.
