The long-awaited revival of Hong Kong's retail sector has finally arrived in H1 2018 on the back of an upbeat consumer sentiment and an ongoing recovery of tourist arrivals. More than 16 million mainland travellers visited Hong Kong in the first four months of this year, 13.2% more compared to last year, according to Hong Kong Tourism Board (HKTB).

Colliers Flash Report at a glance: 

• Hong Kong's retail sector has seen 13.9% sales growth YOY so far, reaching levels comparable to last market peak.
• Private consumption expenditure lifted by 8.6% YOY in Q1 2018 according to Census and Statistics Department (C&SD).
• Retail rental to see moderate recovery with overall highstreet rents growing by 1-3% YOY in 2018 and 3-5% YOY in 2019.
• Colliers has revised retail sales growth upwards to 8-10% YOY for 2018. 

Meeting demands of millennials rather than focusing on luxury shopping demand from mainland tourists has helped to stimulate local spending, lifting overall private consumption expenditure by 8.6% YOY in Q1 2018, according to Census and Statistics Department (C&SD). This led to an impressive overall retail sales growth of 13.9% YOY so far this year which is the highest growth in the first four months YOY since the market peak in 2013, according to C&SD.

Outstanding Lunar New Year results have boosted Q1 retail sales. The shopping boom continued as the Labour Day Holiday, or "Mini-Golden week," attracted high visitor numbers. Major shopping districts were bustling, particularly with visitors from the mainland. Queues in front of luxury stores on Canton Road in Tsim Sha Tsui recalled peak market times. Key Grade A shopping malls including Harbour City, Times Square and Hysan Place have reportedly outperformed the already strong overall sales rise. The resuming demand for jewellery and watches and lifestyle-related consumption, including young fashion apparel, accessories and cosmetics are the growth drivers.

Retail sales may grow faster than expected based on strong results in Q1 and Q2, followed by a strong summer and a busy year-end period. The scheduled opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, combined with the launch of the Hong Kong-Zhuhai-Macao bridge should bring in more mainland tourists in time for the October "Golden Week." Hence, Colliers has revised retail sales growth upwards to 8-10% YOY for 2018. 

Moving forward, Colliers expect the momentum in the retail market to persist; strong local consumption and increasing inbound tourism should continue to strengthen leasing demand for prime locations. Despite this positive environment, retailers will have to keep evolving their services in-store and online to optimally engage with their consumers and achieve a healthy and sustainable growth. 

Click here to view Colliers International Flash Hong Kong Retail Report 2018. 

For more information or to discuss the report, phone or email Nigel Smith, Managing Director Hong Kong, or Cynthia Ng, Director of Retail Services, of Colliers International via the contact details listed below.

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