Rents of street-level shops in Hong Kong to inch 8% higher

That's over the next 12 months.

According to Colliers International’s Hong Kong Retail Market Research & Forecast Report 1Q 2013, street-level shops in the four key traditional shopping locations – Central, Causeway Bay, Mong Kok and Tsim Sha Tsui – registered a milder growth in early 2013. The rental growth slowed from 1.4% quarter-on-quarter (QoQ) in 4Q 2012 to 1.1% QoQ in 1Q 2013.

Simon Lo, Executive Director of Research & Advisory, Asia at Colliers International, reckons that although the acute lack of prime shopping space for lease and sustained demand from international retailers continue to underpin retail rental growth, the slower growth of retail sales has reduced retailers’ profit and their ability to pay soaring rents.

“As a result, retail property owners are now less aggressive in rental demands.” 

Looking ahead, Hong Kong’s retail rents are projected to continue to grow with the support of various positive factors such as buoyant tourism industry, sustained demand from overseas retailers, limited supply of prime shopping premises, increasing household income and rising inflation.

Over the next 12 months, Colliers projects rents of street-level shops in the four key traditional shopping locations to edge up 8%.