Hong Kong's prime retail rents are forecast to increase by 5% to 10% in 2026, according to Knight Frank, with prime street shops expected to outperform the broader retail market. The projection comes as the city's retail recovery remained firmly on track in July, with sales rising 4.5% year on year despite weather disruptions and increased outbound travel during the summer holidays.
The latest increase followed 4.6% year-on-year growth in June, with Knight Frank saying the retail market demonstrated resilience despite typhoons, rainy weather and seasonal travel weighing on consumer activity. Luxury spending continued to outperform, increasing 19.7% year on year in July, the property consultancy said.
Looking ahead, Knight Frank expects the upcoming Golden Week holiday to support visitor arrivals and retail spending, providing a further boost to the sector. Retail property transactions, however, presented a mixed picture. In Lan Kwai Fong, the former Insomnia bar at G/F Ho Lee Commercial Building, with a gross floor area of 3,228 sq ft, was sold by the mortgagee for HK$58.68 million, equivalent to HK$18,178 per sq ft.
Knight Frank noted that the price was more than 65% below the property's original asking price, highlighting continued repricing, particularly among distressed retail assets. At the same time, continued interest from Chinese mainland investors indicates that demand for value-add and opportunistic retail acquisitions remains active.
Prime retail assets are attracting stronger investor interest. Knight Frank noted that BANDAI acquired the entire building at 8 Cochrane Street, Central, for about HK$95 million in 2025. The seven-storey property, formerly occupied by the century-old Chun Wo Tong, has since been converted into the flagship store of Hong Kong online toy retailer TOYC, which opened on 22 September 2026.
According to Knight Frank, the transaction and subsequent opening demonstrate the continued appeal of prime street-front retail assets, alongside growing demand for experiential and collectibles-focused retail concepts. With tourism recovering and lifestyle and entertainment retailers maintaining demand, Knight Frank expects prime street shops to outperform the broader retail market, forecasting rental growth of 5% to 10% in 2026.
