Hong Kong’s weakening retail sales and slumping property market have sharply reduced the capital values of commercial real estate owned by celebrities like Nicholas Tse Ting-fung and the family of the late “King of Gambling” Stanley Ho Hung-sun.
The Macau tycoon’s property at 20 Kimberley Street, Tsim Sha Tsui, has been put up for sale at HK$88 million (US$11.3 million), CBRE, the sole agent for the sale, said on Tuesday. The 1,410 sq ft corner site has a maximum commercial development potential of about 16,920 sq ft.
“It is very rare to see such a prime development site in the heart of Tsim Sha Tsui for sale,” said Reeves Yan, head of capital markets at CBRE Hong Kong.
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He added that the price translated to an accommodation value of HK$5,200 per square foot. Accommodation value is the land acquisition cost divided by the gross floor area permitted for the project.
The most recent commercial en-bloc sale in Tsim Sha Tsui was that of The Popway Hotel, at No. 117 Chatham Road South in June 2024, which was valued at HK$180 million or HK$7,331 per square foot.
Hong Kong’s retail property market has been grappling with a downturn for the past two years. A gauge of private retail properties compiled by the Rating and Valuation Department has slumped by nearly half from a peak. The index stood at 380 in December compared with the record high of 601 in November 2018 when the city’s property market was booming.
Meanwhile, the popular singer and actor Tse recently leased out a shop in Central at a 40 per cent discount after it remained vacant for more than a year, agents said.
Tse’s property at 28 Lyndhurst Terrace has been rented to a jewellery store at HK$60,000 per month, down from its initial listing of HK$100,000 after it fell vacant in January 2024. He reduced the asking price to HK$68,000 in January this year before settling at the current level.
The 1,200 sq ft shop comprises 700 sq ft on the ground floor and another 500 sq ft on the mezzanine level.
In 2018, a wine retailer took out a three-year lease for HK85,000 per month. When the Covid-19 pandemic broke out, Tse lowered the monthly rent to HK$57,000.
In 2021, the wine retailer renewed the lease for another three years at HK$80,000 and vacated the site when the lease expired in January last year.
Hong Kong’s falling retail sales have also affected the rental outlook for retail property.
Retail sales fell for a tenth month in December, bringing the overall decline in 2024 to 7.3 per cent, with total sales for the year amounting to HK$376.8 billion, according to official data.
High street shop vacancy rates in the four key shopping districts of Central, Causeway Bay, Tsim Sha Tsui and Mong Kok increased by 1 percentage point in last year’s fourth quarter from the previous three-month period, according to CBRE’s latest report. On an annual basis, the vacancy rate decreased by 1.3 percentage points to 7.8 per cent at the end of December.
CBRE said that a relatively low vacancy rate for high street shops could support rental growth of up to 5 per cent this year.
In addition, oversupply remains the common thread that connects the downturn in the residential, commercial and retail property markets, S&P Global Ratings said in a recent report.
The rating agency expects Hong Kong’s retail property market to continue struggling in 2025, as the city loses consumers to mainland China’s vast and efficient online markets.
“We believe Hong Kong retail landlords will focus on keeping tenants at lower rents, as losing tenants would be more corrosive to recurring cash flow,” said Wilson Ling, a credit analyst at S&P Global.
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