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Hong Kong, 23 April 2012 –The retail sector remained the most active property sector in 1Q12, with no signs of demand slowing, according to Jones Lang LaSalle’s latest research.
Retail sales continued to grow with a further increase of 15.2% y-o-y in January and February combined, after posting a strong overall increase of 24.9% in 2011.
The strong retail sales performance was driven in part by sustained growth in the tourism sector. Tourist arrivals in 1Q 2012 increased by 15.2% y-o-y in the first two months of 2012, outperforming the 11.9% y-o-y growth registered for the same period in 2011.
The robust sales figures also contributed to activity in the leasing and sales markets, with retailers continuing to search for space and investors actively buying. Despite rising rents, both international and local retailers continued their aggressive expansion to secure retail premises in prime locations for higher market exposure. Persistent leasing demand drove up rents by 4.5% for both prime street shops and premium centres, while capital values for prime street shops also rose a further 9.7% in the first two months of 2012.
Supply of new retail space is eagerly expected by both international and local retailers, following Hysan Place’s obtainment of an occupation permit in March, adding 450,000 sq ft of prime retail space in Causeway Bay.
On the Kowloon side, Jones Lang LaSalle has been appointed as sole leasing agent for 18 Mody Road, the only new commercial office supply in Tsimshatsui expected in 2012. Scheduled for completion in the fourth quarter of 18 Mody Road is a 16-storey commercial building offering approximately 20,000 sq ft (gross) of semi-retail and office space, with approximately 9,000 sq ft (gross) retail space. 18 Mody Road commands a core location in Tsimshatsui, situated opposite K-11, Masterpiece and the Hyatt Regency, where international luxury jewellery and watch brands occupy retail space on Mody Road.
Tom Gaffney, Head of Retail at Jones Lang LaSalle Hong Kong, said, ‘Hong Kong remains a key focus and a dominant market for retailers in 2012. We strongly believe that we will see another year of solid retail sales, rental growth and transactions. We believe that locations such as Causeway Bay, Central and Tsimshatsui will see the most activity in this sector for the rest of 2012.”
Hong Kong Prime Retail Indicator – % Change
Capital Values (Q-o-Q)
Prime Street Shops
Overall Prime Centres
Premium Prime Centres
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