Savills’ latest Hong Kong Retail Leasing Market Report finds that Hong Kong’s retail market continued to improve in the second quarter of 2026. Total retail sales rose 7.1% year-on-year, while online retail sales surged 25.3%. However, the recovery remains narrow-based, with spending growth concentrated in discretionary categories such as jewellery and watches and consumer durables. Core retail districts have benefited from the return of visitors, luxury demand, flagship expansion and experience-led formats, with rents remaining stable in the second quarter following a rebound in the first quarter. In contrast, neighbourhood malls continue to face pressure from northbound spending, online substitution and weak everyday consumption. The market has entered a phase of structural recovery, increasingly shaped by asset quality and tenant mix.
- Prime street shop rents stabilised:Rents in the four core retail districts were flat QoQ in Q2 2026, indicating that the market is digesting the gains recorded in the first quarter rather than entering another period of rapid rental growth.
- Shopping centre rents remain under pressure: Rents of major shopping centres fell 1.8% QoQ overall. The New Territories saw the steepest decline, at 2.7%, followed by Kowloon at 2.0% and Hong Kong Island at 0.5%.
- Consumer recovery remains uneven: Sales of jewellery, watches and valuable gifts increased 22.1% year-on-year, while consumer durables rose 13.8%. By comparison, supermarket sales grew by only 0.9%, with some fresh-food categories recording flat or negative growth, underscoring continued weakness in everyday consumption.
- Structural challenges persist in neighbourhood districts: Hong Kong residents’ northbound spending is estimated at approximately HK$55.7 billion per year. Together with an average of around 10.4 million Hong Kong resident departures per month in early 2026, this continues to divert customer traffic and consumer expenditure from local shopping malls. Even where occupancy remains high, renewal rents and rental income per square foot are under pressure.
- New supply will intensify competition: Approximately 8.0 million sq ft of new retail space is expected to commence operations from 2026 onwards, primarily in new development areas and neighbourhood districts. Future competition will extend beyond tenant acquisition, with clearer positioning, optimised tenant mixes and the ability to attract destination visits becoming increasingly important.
Mr. Jack Tong, Director, Research & Consultancy of Savills commented, “Hong Kong’s retail market is gradually improving, but the current phase is one of structural recovery led by asset quality rather than a broad-based rebound. Prime locations are stabilising first, supported by returning visitors, luxury spending and demand for experiential retail. However, neighbourhood malls continue to face competition from outbound consumption, online retail and incoming supply. Going forward, landlords will need to place greater emphasis on project positioning, customer catchment and spending conversion in order to safeguard sustainable rental income.”
Mr. Barrie Chan, Senior Director, Retail of Savills said, “Retail leasing demand has improved, with emerging requirements from mainland Chinese brands, sports and entertainment operators, wellness concepts, light dining and immersive experiences. Nevertheless, retailers are becoming increasingly selective in their location strategies and will place greater emphasis on a mall’s ability to generate meaningful footfall and sales conversion. For landlords, introducing flexible leasing formats such as pop-up stores, lifestyle food and beverage offerings, pet-friendly concepts and interactive experiences—while tailoring tenant mixes to local consumption patterns—will be key to enhancing a project’s competitiveness.”