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Weekly Snippet | Improved Q1 sentiment creates positive market outlook


The first quarter saw economic uncertainties still cloud the real estate market’s outlook. For the retail sector, large size premium brand expansions remained quiet in core locations, and luxury brands continued to scale back their operations. For the office leasing market, MNCs continued to show signs of operational downsizing in Hong Kong and consider relocating part of their operations to non-core locations to save costs. However, we have observed a slight pick-up of consumer and office leasing sentiment in Q1 this year. Providing a snapshot of on the ground activity, we hear from our experts Cynthia Ng of Retail Services and Nancy Chan of Valuation & Advisory Services.

Gradual rebound in consumer sentiment

Hong Kong’s retail sales have turned around in the first two months of 2021 with total sales value up by 2.7% YOY. The leasing market showed early signs of a small revival in the first quarter while consumer sentiment and business confidence are gradually picking up. Yet, large size premium brand expansions remain quiet in core locations, and luxury brands continue with their shop consolidation plans in Hong Kong.

As of 10am on 9 April, members of the public can redeem their spending receipts for a discount on hotel staycation packages spent under the Hong Kong Tourism Board’s “Staycation Delights” programme. The Tourism Board had previously announced the “Staycation Delights” programme, which entitles members of the public that spend a minimum of HK$800 between 26 March and 31 May on a hotel can redeem a HK$500 discount on a hotel staycation package at physical retail or dining outlet. There are 140 hotels participating in this programme, which will hopefully boost the local staycation market and support to the hotel industry.

Implications for the downsizing trend in office leasing

French Bank Société Générale announced last week that they would give up one of the seven floors they were renting at Three Pacific Place when the existing lease expires in October. This appears to be part of a trend, with several international banks recently announcing downsizing plans within Hong Kong. This includes DBS that will hand back two of their eight floors at One Island East, Standard Chartered which will vacate eight floors at Standard Chartered Bank Building, and Deutsche Bank which surrendered three of their 12 floors at ICC.

While some may view this as international banks losing confidence in Hong Kong, the reality is that a combination of a weaker economic environment and a COVID influenced shift in working practices have prompted many large occupiers to evaluate their office space requirements. Similar downsizing trends are also evident across many other Asian cities, including Hong Kong’s big rival Singapore that has seen Citi and Mizuho recently surrender significant space.

In contrast, the Bank of Dongguan has leased the 25th floor of Two IFC which was vacated by Nomura last year. This is part of a paradigm shift in occupier demographics within Hong Kong’s most expensive office building. Upon completion of Two IFC in 2003, over 70% of the occupiers were international firms, while that figure now stands at just 43%, with Mainland firms largely filling this void. Similar patterns can be seen across several of the ‘trophy’ office assets in Central.

Additionally, recent leasing activities in de-centralised districts were dominated by MNCs. A recent case in point is DHL. The company has just agreed to take up approximately 90,000 sq. ft. of space at ITT in Kowloon East, which can be considered as an upgrade on their existing premises at Enterprise Square Five. Another example is DBS which is also expected to focus on de-centralised districts as they relocate part of their operations from Island East to be closer to their customer markets in Kowloon and the New Territories.

As a conclusion, we expect Mainland companies will be looking at further expansion opportunities in Hong Kong. MNC companies, on the other hand, are more likely to focus on cost-saving strategies and real estate solutions that help them adapt to the changing business landscape and working environment. MNCs have been harder hit by COVID than Mainland Chinese companies, which will create an imbalance of demand across the region, not just in Hong Kong.

If you would like to know more about the market, or what options face you as a real estate professional or occupier in Hong Kong, don’t hesitate to contact our experts to see how we can help accelerate the growth of your business.

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Cynthia Ng

Executive Director | Head of Retail Services

Retail Services

Hong Kong

Cynthia Ng is an award-winning retail services veteran with more than 14 years’ experience.  Cynthia was educated in Sydney and holds a bachelor degree in Construction Economics (Quantity Surveying) from University of Technology, Sydney.  She started her career with major developers in Sydney and has spent the last 11 years in Hong Kong with global property agencies working across all key retail sectors and high-profile fashion, F&B and international FMCG brands.

As Executive Director of Retail Services, Cynthia leads the successful operation of the retail brokerage business, meeting the needs of the company and her clients, while cultivating a team with the best leasing advisory and negotiating skills.

Prior to joining Colliers, she worked in CBRE as Director of Hong Kong Retail, with a key focus on international brands entering and expanding in Hong Kong. In 2015 she won the ‘Excellence in retail services’ award from CBRE, recognising her achievements in business.


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Nancy Chan

Associate Director

Valuation & Advisory Services

Hong Kong

Nancy joined Colliers in 2019, she is specialising in valuation and advisory services. She is always willing to help her client and gives her professional valuation  advice on their properties, assets, plant and equipment, business and financial instruments. 

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