At a glance
With no drastic changes in the external environment, including interest rates, retail rents in 2013 are expected to rise by 0 to 5%, showing clear signs of slowing. Rents for prime street shops in areas such as Russell Street in Causeway Bay and Canton Road in Tsim Sha Tsui are unquestionably firm. According to the latest Savills retail rental briefing, rents in the first quarter of this year experienced a 1% increase while stock of prime street shops remains very limited. Rents of shopping centres, on the other hand, have in general increased 1.5% in the first quarter this year.
At a glance
With no drastic changes in the external environment, including interest rates, retail rents in 2013 are expected to rise by 0 to 5%, showing clear signs of slowing. Rents for prime street shops in areas such as Russell Street in Causeway Bay and Canton Road in Tsim Sha Tsui are unquestionably firm. According to the latest Savills retail rental briefing, rents in the first quarter of this year experienced a 1% increase while stock of prime street shops remains very limited. Rents of shopping centres, on the other hand, have in general increased 1.5% in the first quarter this year.
Retail prices, however, seem more affected by the latest government cooling measures, which aim to curb sub-sales before the property is delivered. As transaction costs have risen, and after 12 months of frantic activity in the sector, prospective buyers have now taken a “wait-and-see” approach and prices have stalled. Retail prices may see a bigger fall of approximately 10% to 15% this year.
Now or later?
“Potential buyers are now waiting for lower-priced retail shops to come to the market, with very few significant retail sales transactions completed since the government introduced the new measures in February,” Simon Smith, Head of Research and Consultancy Services, Savills said. “Rents of prime shops in Hong Kong are now among the highs in the world and the rate of increase will inevitably slow this year. In this case, buyers are looking for the opportunity to purchase properties which more closely match their requirements.
Although the retail sales market may see a quieter period amid the new cooling measures, potential buyers may be presented with an opportunity to purchase quality retail properties, as they have more room in price negotiations. “The coming months could be critical for some buyers as they regard the cooling measures as a golden opportunity to purchase lower-priced and better quality shops,” said Sharon Fong, Head of Retail Sales, Savills. “As long as the supply of retail shops in Hong Kong is limited and the number of tourists remains strong, we continue to hold an optimistic outlook on Hong Kong’s retail market.”