Prime street shop rents in core shopping districts dwindled by 2-11%

In September, overall rent fell 2% QoQ.

It has been noted that year-to-date, prime street shop rents in the four core shopping districts of Hong Kong, namely Tsim Sha Tsui, Mong Kok, Causeway Bay and Central, declined by between 2% to 11%.

According to a research note from Savills, meanwhile, average base rents in major shopping centres rose by 4.5% over the same period.

Further, the report said that retailers, suffering from weakening sales and dwindling profits, are being pressed to rethink or restructure their network planning, halt expansion plans, relocate stores for rental savings or even downsize operations.

Market activity in the prime street shop segment was subdued over the last quarter and Savills has noted a rising number of renewal and early surrender cases in recent months.

Overall prime street shop rents in Hong Kong fell by approximately 2% QoQ in September.

Here's more from Savills:

In contrast, major shopping centres in Hong Kong continue to see sustained demand from both local and international retailers and average base rents increased by 1.0% QoQ over Q3/2014.

Quality shopping centres are increasingly considered as a “valuable” option when compared to street shops in prime locations after years of more moderate rental growth in that sub-market.

The trade and tenant mix and quality management offered by shopping centres is attracting strong demand from international brands, especially small to medium sized operators with limited experience of the local market.

Newcomers launching in shopping centres in recent months include Phase Eight (a British fashion brand), Scotch & Soda, TOMS, Moleskine, Monica Vinader, Castañer (a Spanish shoe brand) and Helianthus (a Korean leather goods brand).