RCA Insights

Chart: Retail Yields in Hong Kong Swing Downwards

By on April 13th, 2021

Landlords of shops in Hong Kong have had a rough ride over the past two years. The political unrest in the middle of 2019 had already exacted a heavy toll on retailers, with businesses disrupted by the clashes and overseas visitors unnerved. (This author too put his own family’s vacation plans on ice.) Then tourist numbers all but evaporated with the onset of Covid-19 less than a year later.

Resultantly, prices of CBD shops plummeted, as average quarterly yields headed upwards by 100 basis points between the middle of 2018 and the second quarter of 2020. (This analysis is based on retail assets trading at a value of HK$20 million — $2.5 million — and greater.) Throughout the whole of 2020, no shop assets traded at a sub-2% yield, according to Real Capital Analytics records. The last time the yield floor for such assets was this high was in 2008.

HK retail yields of shops HK$20m and greater 2017-2021

Towards the end of 2020 the trend began to reverse. With retail prices having fallen significantly from peak to trough – according to a custom RCA CPPI indicator, the decline was almost 20% – domestic investors were enticed to return to the market. The fall in investment into Hong Kong CBD shops finally bottomed out in the fourth quarter.

The recent removal of the double stamp duty on investment in commercial properties has ensured that dealmaking momentum has continued into 2021. Both CBD retail volume and deal count in the first quarter are well ahead of last year, although they remain significantly below levels in 2017-18 for now. But sentiment is gradually improving, as evidenced by the return of sub-2% yields across both the luxury boutiques in Central as well as high street shops in Causeway Bay and Mong Kok.


Real Capital Analytics will publish the new edition of Asia Pacific Capital Trends on May 5. To learn more about how RCA’s reports, data and tools can inform your investment decisions, contact us.

Benjamin Chow

Head of Analytics, Asia

Benjamin Chow is the Head of Analytics for Asia, based in RCA’s Singapore office and a lead author on Asia Pacific Capital Trends. His expertise spans both the commercial and residential real estate markets in Asia Pacific.