Restaurants and Retail Vacancies in Hong Kong: The Impact of Consumer Trends

Restaurants Struggle Amid Retail Challenges

In recent months, restaurants in Hong Kong have faced significant challenges, resulting in a spike in retail vacancies within core business areas such as Central, Mong Kok, and Tsim Sha Tsui. According to a report by Midland IC&I, the number of vacant high-street shops rose from 720 in Q1 to 874 in Q3, resulting in a vacancy rate of 11.7%, the highest since September 2020.

Impact of Consumer Trends

With consumers increasingly spending in mainland China, local businesses are feeling the pressure. Midland's chief sales director Andy Kong noted that changes in population dynamics and consumer habits are weakening the local retail landscape. The report highlighted that over the past six months, 56 food and beverage outlets closed, demonstrating the fierce competition within the sector.

Future Outlook

Looking ahead, the retail and restaurant industry in Hong Kong is projected to continue facing challenges. Midland estimates that high-street shop vacancy rates may hover between 11.5% and 12.5% through March next year, which could lead to further declines in shop prices and rents by 10%. Although interest rate cuts may assist the commercial property market, they are anticipated to only slow the decline of street-shop prices.

Recent Leasing Activity

Despite the challenges, there have been some leasing activities by international brands. For instance, Giorgio Armani secured several properties totaling 10,261 sq ft at an estimated monthly rent of HK$1.2 million. Similarly, Mango leased a 19,075-sq ft shop for HK$1.25 million. Meanwhile, **Prada** is set to open a new store in Tsim Sha Tsui, revealing a glimmer of hope amidst a generally depressed retail sector.