Hong Kong retail rents to see one of the highest increases in Asia over next five years, US asset manager PGIM says
- High-street retail rents to recover broadly to levels seen before the pandemic, but hard to imagine a return to their ‘prime’, PGIM executive says
- Tourist arrivals expected to return to pre-pandemic levels in 2024, spending to recover the following year
“In the next five years, we expect high-street retail rents will recover broadly to the same levels seen before the pandemic, which translates to about 3 per cent to 4 per cent per annum growth,” said Cuong Nguyen, head of Asia-Pacific investment research at PGIM Real Estate. “The pace of year-on-year growth might vary, but we think the momentum will be more front-loaded.”
The rent increases are likely to be supported by a continued recovery in tourist arrivals and spending in the city, he said. Hong Kong’s economy, which is expected to see a “long-term trend level of 2 per cent to 3 per cent on average growth in the next few years” will also bolster the retail segment, Nguyen said.
“Although it is hard to imagine Hong Kong’s retail street returning to its prime, we do expect rents to gradually recover.”
In the first nine months of this year, retail sales in Hong Kong rose by 18.6 per cent to about HK$302.3 billion (US$38.77 billion) from the same period in 2022, according to the latest preliminary figures released by the government.
