Retail rents rising in New Territories

It’s being caused by flood of mainland day-trippers.

Property adviser Savills reported that rents at malls on the city’s outskirts are expected to grow as much as 10% later this year. Rents are currently about a tenth lower than those in Hong Kong’s business center.

On the other hand, rents of street-level shops in prime shopping districts in Hong Kong will probably remain flat while those in prime-location malls will increase by some 5%.

Savills noted a major shift in spending patterns among Chinese travelers with areas closer to the Chinese border probably seeing higher rental growth this year.

Average rents on Hong Kong Island rose 45% in 2011 and 2012, more than double the growth in the New Territories, due mainly to luxury item spending by wealthy mainlanders.

That trend is changing, however, and many mainlanders now visit Hong Kong regularly to purchase household goods such as food and milk powder because of lower HK prices and product safety issues in China.

Close to 19 million mainland tourists visited Hong Kong in the first half, up 20% on-year. Single-day visitors rose 24% to 11 million compared to the 16% increase in the number of those staying overnight.