CBRE Group released "Hong Kong Commercial Real Estate Market Insights for the First Half of 2024" on the 8th, stating that the leasing of Hong Kong commercial properties was weak in the first half of this year due to a decrease in available spaces for rent and increased uncertainty in consumption patterns. The total sales value of the retail trade in the first five months of this year decreased by 6.1% compared to the same period last year.
In terms of leasing volume, the restaurant industry is still the main driving force for commercial property leasing demand, with a leasing volume of 0.197 million square feet in the second quarter of this year. Despite slow rebounding of tourist numbers and slowing demand from watch and jewelry retailers and pharmacies, lower rents have driven fashion brands to enter core areas and expand.
In terms of vacancy rate, the vacancy rate in the second quarter of this year increased by 0.2 percentage points from the previous quarter, but it has improved significantly from the end of 2023's 9.1%. As for the first half of this year, Central's vacancy rate improved from 11.8% to 9.2%; Tsim Sha Tsui's vacancy rate remained stable; Causeway Bay's vacancy rate decreased from 5.3% to 3.9%; and Mong Kok's vacancy rate improved significantly from 9.7% to 6.3%.
As the leasing momentum slows down, rent growth has also slowed down. The overall rent in the second quarter of this year increased by 1.0% from the previous quarter, while in the first quarter of this year, it increased by 2.7% from the previous quarter. It has risen by 3.7% in the first half of this year.
Winson Wan, Senior Director and Head of Retail Services at CBRE Hong Kong, said that despite the slowdown in leasing momentum in the first half of this year, it still exceeded the levels of 2018 and 2019. The economic slowdown is mainly due to the low sentiment in retail sales and a decrease in available street shops in core areas. Leasing activities in the first half of this year mainly focused on the restaurant industry, fashion and footwear retailers, and pharmacies. In the first quarter of 2024, the performance of the restaurant industry varied, with most restaurants' revenue increasing year on year, except for bars. Currently, shop rents in core areas are still around 30% lower than the peak in 2019. (JS / U)
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