Savills

Publication

Hong Kong Retail Leasing - March 2025

Article

Contacts & Related Research

 

Mainland Brands Expand Against Market Headwinds: Hong Kong Retail Faces Challenges and Opportunities

  • Hong Kong's total retail sales declined 7.3% YoY in 2024, with prime district shop rents projected to fall 0% to -5% in 2025.
  • Despite 31% YoY growth in total visitor arrivals in 2024, spending by mainland tourists dropped significantly (-24% per capita for overnight visitors), impacting luxury retail.
  • Physical store demand contracted sharply, with cinema, bank branches, and travel agencies (e.g., China Travel Service reducing outlets by 52%) downsizing operations.
  • Over 40 F&B and discount supermarket chains from mainland China have entered residential neighborhoods, targeting to middle-and lower-tier consumer segments.
  • While strong HKD and local spending outflow pose challenges, major events (arts festivals, sports) and potential multi-entry visa expansions may revive high-value tourism demand.

In Q4 2024, the retail leasing market experienced a sustained downturn, leading to the closure of operations by large-space tenants. While we observe a cautious sentiment in the retail sector, there is emerging expansion demand from both Chinese and local brands, which may help mitigate the effects of reduced local and tourism spendings.

Jack Tong, Savills Research & Consultancy
Read more