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News Release


JLL: High Street Shop Rents will drop 10-15% in 2016

HONG KONG, 9 December 2015 – The drop in tourist arrivals in Hong Kong has created pressure on the retail leasing market this year. Hong Kong visitor arrivals through January-October were down 0.8% y-o-y, compared with 12.0% growth in 2014. Arrivals from mainland China dropped 0.2% y-o-y, a marked slowdown from the 16.0% growth in 2014. The inbound tourism target of 64.5 million for 2015 is not likely to be met, with only 49.5 million visitors entering the city in the first ten months of this year.

Total retail sales growth declined 2.7% y-o-y in the first ten months of the year, against an average growth of 10.1% per year over the last 10 years. The decline in retail sales has been led by a plunge in the spending on luxury items which are attributed to the anti-corruption drive in China and the shifting pattern of mainland Chinese consumers.

Rising vacancy across the city's four prime shopping districts contributed to a major correction in retail rents in the second half of the year with the average rent of high street shops down by 22.6% this year. Supported by high occupancy rates, rents in prime shopping malls, however, still managed to grow a further of 0.7%, though growth had slowed to a crawl by the last quarter of the year.

Terence Chan, Head of Retail at JLL Hong Kong, said: "The rental correction in high street shops is expected to continue as demand from higher rent payers remains weak. For 2016, we expect high street shop rents to drop a further 10-15% given that vacancy pressure in prime shopping districts will remain. With demand for prime shopping centres continuing to overshadow high street shops owing to the lower rental outlays and more resilient footfalls, rents are likely to remain broadly stable though any risks will be to the downside."

"Still it's not all gloom and doom for the retail sector. The pullback in high street rents has provided opportunities for lifestyle and cosmetic retailers along with F&B operators to secure shops in some of the city's most prime shopping locations at a discount. As such, even though luxury brands and watch and jewellery retailers continue to downsize, we expect to see mid-range retailers such as fast fashion and F&B operators remain active in leasing market," added Chan.

Hong Kong Prime Retail Indicator - % Change




2016 Rental Forecast
High Street Shops▼22.6%▼10-15%
Prime Shopping Centres▲0.7%Stable