Activity levels picked up in the second quarter as locally-focused retailers moved to take advantage of lower rents and improved availability in prime locations.
- Stimulated by the latest round of the Consumption Voucher Scheme dispersed from April 7th, retail sales value rose by 11.7% YoY in April, before falling back by -1.7% in May as the stimulus effect faded.
- Leasing activity picked up modestly in Q2/2022 in both core and suburban locations after a slow first quarter, mainly driven by F&B, grocery and lifestyle related trades.
- Supported by improved sentiment in the leasing market, rents in both the prime street shop and major shopping centre segments remained relatively stable over Q2/2022 registering modest YoY growth of 1.7% and 0.4% respectively.
- Luxury brands continued to offload non-profit making stores but at the same time mass market and locally focused fashion chains took advantage of the lower rent environment to take up space in prime locations.
- Some of the new supply in the pipeline this year will be delayed to 2023, with many of the upcoming projects located in suburban locations to capitalise on fast growing residential populations.
- Eligible registrants for Phase 2 of the CVS will include non-permanent residents. The expanded program will add an extra 300,000 people and an additional HK$1 billion, and this will give another boost to the local retail market. However, rising mortgage rates and slower economic growth will hit the disposable incomes of local residents and reduce overall spending power in the second half of the year.