“We have seen that following the border reopening, the travel outflow of locals is greater than the inflow of tourists to Hong Kong, which could diminish some local consumption power,” said Rosanna Tang, executive director and head of research in Hong Kong at Cushman.
“As a result, the retail market during the long holidays such as Labour Day and the Buddha’s Birthday holiday periods was not as active as the market has hoped-for.”
A V-shaped recovery or a sharp upswing in the retail property market is unlikely, the report said.
The retail segment was one of the hardest hit in Hong Kong after the unprecedented social unrest of 2019 was immediately followed by the coronavirus pandemic.
The anti-government protests four years ago, which at times turned violent, had put mainland Chinese visitors off coming to Hong Kong. When the pandemic came along, forcing the closure of borders, tourists all but vanished from the city.
Many of them came for the shopping, often returning home laden with luxury goods.
Still, the number of tourists was a long way shy of the 34.8 million who came in the first half of 2019.
Almost 29 million Hong Kong residents, meanwhile, headed abroad for holidays in the period.
“As leisure travel shows no sign of waning, the widening inbound-outbound gap may impede the retail market recovery in the remainder of the year,” said JLL in a separate report, published on August 29.
Despite the somewhat clouded outlook for the retail sector, some notable transactions were recorded in the first seven months of 2023.
French luxury fashion house Chanel leased 18,000 square feet of space at Jardine’s Bazaar in Causeway Bay. In Central, The Macallan, a Scottish whisky brand, opened its first global flagship store on the second and third floors of the Hing Wai Building, occupying 8,519 square feet and paying a reported monthly rent of about HK$600,000.
Knight Frank said a pharmacy had recently taken an 818 square-foot ground floor unit at 45 Haiphong Road in Tsim Sha Tsui. It leased the space for HK$300,000 per month, an increase of nearly 70 per cent in rent compared to the previous contract.
