Retail sales in Hong Kong increased by more than 10% year on year in the first five months of 2026, yet the city continues to experience a wave of shop closures. This has created a divide between tenants and landlords over the state of the retail leasing market.

Many tenants report stagnant business conditions despite efforts to find solutions. They attribute their financial losses to constant price cutting aimed at attracting customers, a challenge linked to the broader economic climate. Consequently, many tenants are seeking rent reductions ranging from 20% to 50% to alleviate their difficulties.

In contrast, landlords believe the retail market is recovering and are generally offering only limited rent cuts, typically between 10% and 20%. Some landlords have even raised rents in certain shopping centers.

Michael Leung, chairman of the Association for Hong Kong Catering Services Management and a restaurant owner, described the operating environment as "poor," noting that "there are very few people on the street by 8pm, and the industry is plagued by cutthroat price wars." He also highlighted that over 500,000 people leave Hong Kong for the mainland during long holidays, which severely impacts the catering sector. Leung closed the Lucky Dragon Palace Restaurant, known as a "TV Stars’ canteen," in October 2025, ending its 45-year history.

Edward Chan, founder of Hong Kong-based appliance maker German Pool, added that online sales have significantly hurt traditional brick-and-mortar stores.

This ongoing retail rift underscores the challenges facing Hong Kong's retail and catering industries amid shifting consumer behaviors and economic pressures.

Sources