A landlord's success depends on curating tenants, not just renting space.
Hong Kong's retail sector is finding its footing again — not by returning to what it was, but by becoming something different. First-quarter retail sales climbed 12 percent year-on-year to HK$106.3 billion, signaling that shoppers and tourists are back, even as landlords quietly abandon the ambition of restoring pre-pandemic rents. In their place, a more deliberate economy is emerging: one where the quality of experience, not the scale of a brand, determines who fills a space and why people come.
- Retail sales surged 12% in Q1 to HK$106.3 billion, confirming that consumer and tourist spending has meaningfully returned to Hong Kong's streets.
- Yet high street rents grew only 1.6% year-on-year, exposing the gap between recovering foot traffic and the premium valuations landlords once commanded.
- Landlords are abandoning the anchor-tenant model, actively curating pop-ups, sportainment venues, and concept-driven retailers to generate stickier, more diverse foot traffic.
- Analysts at Colliers project up to 5% rent growth for the full year, but caution that a broad return to pre-Covid peak levels remains unlikely in the near term.
- Demand is concentrating on well-located, mid-sized units — suggesting the recovery is real but selective, rewarding smart positioning over sheer scale.
Hong Kong's retail landlords have quietly stopped waiting for the old world to return. When first-quarter retail sales reached HK$106.3 billion — a 12 percent jump from the same period a year earlier — it confirmed that shoppers and tourists are coming back. But the recovery unfolding on the ground looks nothing like a rewind.
Rather than filling vacancies with familiar international brands, property owners are now curating their tenant mixes with intention. Pop-up shops, sportainment concepts, and experience-driven retailers are moving in alongside traditional stores — a deliberate response to a world where most goods can be ordered online and physical spaces must offer something more. The logic is simple: experiences draw people in ways that products alone no longer can.
Rents, however, reflect a more measured reality. High street rents grew just 1.6 percent year-on-year in Q1, and Colliers analyst Kathy Lee has been direct about what that means: structural change is underway, not a restoration of old peaks. The firm projects up to 5 percent rent growth over the full year, contingent on steady — not spectacular — recovery.
Leasing demand is concentrating on well-located, mid-sized units capable of hosting varied tenant mixes, rather than the vast footprints once anchored by department stores. Landlords are discovering that a curated, experience-rich building can generate more resilient revenue than a few dominant tenants ever could. In this sense, Hong Kong's retail sector is not simply healing — it is reorganizing around a new premise: that the tenant mix itself is now the product, and curation has become the landlord's most essential skill.
Hong Kong's retail landlords are no longer chasing the ghost of what came before. In the first quarter of this year, the city's retail sales jumped 12 percent compared to the same period a year earlier, reaching about 106.3 billion Hong Kong dollars. The numbers suggest that shoppers and tourists are returning. But the recovery is not a simple rewind of the pre-pandemic playbook.
Instead, property owners are betting on a different kind of tenant. Where once they might have filled their spaces with familiar international brands competing on location alone, they are now actively seeking retailers who offer something harder to find elsewhere—experiences that make people want to linger, to spend, to return. Pop-up shops, sportainment venues, and other concept-driven retailers are filling the gaps alongside traditional stores. The shift reflects a deeper change in what draws people to physical retail in an age when most goods can be ordered online.
Rents, however, tell a more cautious story. High street rents grew just 1.6 percent year on year in the first quarter, a modest pace that suggests landlords are not yet seeing the kind of demand surge that would justify the premium rates of the pre-pandemic era. Colliers, a major commercial property consultant, estimates that rents may rise as much as 5 percent over the full year, but that projection assumes continued steady recovery rather than a dramatic rebound. The analyst firm's head of research and retail consultancy, Kathy Lee, framed the situation plainly: structural change is underway, not a return to old peaks. Rents will likely grow, she said, but a broad-based recovery to pre-Covid levels is unlikely in the near term.
What is actually happening is more selective. Leasing demand is concentrating on well-located, mid-sized units—the kinds of spaces that can accommodate a diverse mix of tenants without requiring the massive footprints that department stores once commanded. Landlords are learning that a building full of varied, experience-focused retailers can generate steadier foot traffic and more resilient revenue than a handful of anchor tenants. The diversification itself becomes the draw.
This pivot matters because it suggests Hong Kong's retail sector is not simply recovering; it is reorganizing. The city's property owners are accepting that the old model—where location and size alone determined value—has shifted. Now, the tenant mix itself is part of the product. A landlord's success depends not just on finding tenants, but on curating them, on building a destination rather than simply renting space. For a city that has long relied on retail as a pillar of its economy and identity, that represents a fundamental recalibration of how the business works.
Notable Quotes
We see structural shifts towards more experience-driven and diversified tenant mixes, rather than a full return to past peak rental levels. While rents are forecast to grow modestly, a broad-based rebound to pre-Covid-19 levels is unlikely in the near term.— Kathy Lee, head of research and retail consultancy at Colliers
The Hearth Conversation Another angle on the story
Why would landlords suddenly care about what kind of tenant they have? Isn't a paying tenant a paying tenant?
Because the pandemic changed what brings people into physical stores. You can buy almost anything online now. What you can't get online is the experience—the event, the discovery, the reason to be there in person.
So they're not expecting rents to bounce back to what they were before?
Not broadly, no. Rents are growing, but slowly. The landlords who are winning are the ones who accept that and build something more interesting instead of just waiting for the old market to return.
What does "experience-driven" actually mean in practice?
Pop-up shops that change seasonally. Venues that combine sports and entertainment. Retailers selling things you can't find in a mall. The idea is that you go there for more than just the transaction.
And the numbers support this approach?
Retail sales are up 12 percent. But rents are only up 1.6 percent. That gap tells you something—people are spending, but landlords aren't getting rich off location premiums anymore. They're getting steady revenue from a more diverse, stable mix.
Is this permanent, or will rents spike again once tourism fully returns?
That's the open question. But analysts think the structural shift is real. Even as tourism recovers, the old model of a few big brands anchoring a mall probably won't come back the same way.