Hong Kong Retail Market
The Hong Kong retail market, after a protracted period of downturn, is now exhibiting early signs of stabilization and an emerging recovery in the second half of 2025. Key retail indicators collectively point to a potential bottoming out of the market, driven primarily by a robust rebound in tourism and large-scale events in Hong Kong.
Since the post-COVID period, the retail sector has undergone a significant shift due to evolving consumption habit and persistent economic pressures including the adoption of online shopping, limited growth due to its small population, and high operational costs.
In May 2025, total retail sales increased by 2.4% year-on-year, ending a 14-month contraction. The surge in tourist arrivals, particularly from mainland China, significantly fueled by Golden week holidays and major events, stands as a primary external catalyst for this improvement.
However, Hong Kong’s retailers still face several critical challenges. Certain sectors—such as luxury goods and household goods—continue to experience headwinds due to evolving consumption patterns, including a shift toward experiential spending, increased cross-border shopping, and currency pressures.
The outlook remains cautiously optimistic, with expectations for continued improvement through 2025, contingent on sustained tourism, effective government support, and the ability of retailers to adapt to these new consumer behaviors. Retailers have now taken on a more open approach to marketing, including pop-up concepts or collaborations with different brands to counter Hong Kong’s scarcity of modern retail spaces.
The Hong Kong government has implemented a series of initiatives to stimulate tourism and allocated US$ 158 million through the Hong Kong Tourism Board to drive premium regional and long-haul travelers through global events like Art Basel, Cirque du Soleil, and the English Premier League. In addition, the newly opened Kai Tak Sports Park is a world-class sports and entertainment complex with a 50,000 capacity is a catalyst for Hong Kong to recapture its world-class city status.
In conclusion, the Hong Kong’s retail recovery is still far from its pre-COVID days and while bottoming out has started to occur, the path to a full, robust, and broad-based recovery remains contingent on navigating persistent structural challenges and adapting to a permanently altered consumer landscape. Traditionally, Hong Kong is one of the most expensive cities when it comes to real estate, but with rents declining more than 41.4% since its peak in 2019, this has made Hong Kong more attractive than ever.
U.S. retailers and operators who are interested in learning about expansion opportunities in Hong Kong, please contact Natalie Tong for information.