Rents nudged down marginally in the third quarter in some districts but more broadly appear to have found a floor.
- In an uneventful third quarter, retail rents continued to drift sideways and are expected to remain flat over the final quarter of the year.
- Both prime street shop and shopping centre rents continued to stabilize in Q3 with minimal -0.3% and -0.4% adjustments respectively. By district, there was little variation among prime street shops with a very minor downturn in Tsimshatsui while shopping centres saw a minor adjustment in Kowloon.
- Any turnaround next year will depend on the performance of the local economy, home prices and most importantly, China’s zero-COVID policy.
- Even if mainland tourists do return in numbers, slowing growth and housing market woes in China combined with a strong US Dollar/HK Dollar will mean that spending will be below previous levels.
- Singapore, Malaysia, Vietnam and Thailand saw a strong uptick in retail performance early this year as they re-opened. According to Oxford Economics’ forecast, retail spending is expected to surge by over 10% from a low base in markets such as Kuala Lumpur, Bangkok, Ha Noi, Ho Chi Minh City, Jakarta and Manila.