
Prime street shop rents to fall by up to 5% next year
While that of shopping centres could spike by 5%-10%.
Despite some recent misgivings, the retail market has proved to be remarkably durable over recent quarters. Retail sales have continued to grow (by 13.4% yearto-date), as have mainland tourist numbers which are expected to reach 40 million this year.
However, we have seen some softening of rents in prime and secondary streets, down from record highs.
Shopping centres, on the other hand, remain the preferred location for most international retailers who appreciate factors such as designand layout, a strong trade mix and professional management, and rents in this segment have continued to rise.
Next year we expect prime street shop rents to fall by 0% to 5%, whereas shopping centres could well see further growth of 5% to 10%.
While prices have begun to make inroads into negative territory, we foresee modest downside next year of 0% to 5%. In a volatile and heavily speculated sector, however, this is a difficult call.