Rent cuts needed to abate Hong Kong retail woes, industry rep. says as sales fall 11.8%
Hong Kong Free Press
Hong Kong’s retail sector woes may last into next year, an industry representative has said, as sales fell 11.8 per cent in July compared to the same period last year.
Chairperson of the Hong Kong Retail Management Association Annie Tse made the forecast on Monday, adding that inbound tourism only had a minimal effect in easing the situation.
Tse told an RTHK programme that spending patterns had changed. She said the retail sector previously relied on mainland tourists, “but most of them now come for sightseeing and don’t spend much,” she said.
The industry representative’s remarks came after the government reported a 11.8 per cent drop in retail sales year-on-year. According to provisional Census and Statistics Department figures, total retail sales fell to HK$29.1 billion in July – down 2.5 per cent from June.
The July figure marked the fifth consecutive month that saw a year-on-year drop in retail sales.
A government spokesperson in a Friday statement attributed the decline to the continued impact of a change in consumption patterns and the strong Hong Kong dollar, as well as increased outbound travel by residents during the summer holidays.
In recent months, Hong Kong has seen a shift in spending patterns with Hongkongers “heading north” for inexpensive dining and shopping, while “citywalks” – exploring the city on foot and taking photos – became the dominant mode of tourism for visitors from mainland China.
Mainland China’s Labour Day Golden Week in May also yielded limited benefits, only marking a 3.4 per cent bump from the previous month, Tse said, adding that the situation may improve slightly next March or April.
Calls for rent cuts
She called for a 30 per cent rent cut to help the retail sector, saying that some retailers had seen rent reductions of around five to 10 per cent – which she described as being “better than nothing.”
Tse also urged the government to improve communication with the industry, as they pushed for “mega events” that would supposedly give local retailers a boost. A three-month heads-up would give the sector sufficient time to prepare for upcoming events that would drive spending, she said.
But Managing Director of Colliers Hong Kong Lau Chun-kong said landlords had been flexible, and that it would be reductive to assume that rent was the only factor behind retail woes. Retailers would have to consider the value of their products as well as salaries. “Rent is only one component,” he said.
Restaurants have also struggled in recent months, with the restaurant sector’s receipts for the second quarter of 2024 decreasing 2.1 per cent in value compared to the previous year.
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