What: The city’s landlords have begun discussing rent increases with tenants in advance of upcoming lease renewals as its retail sector emerge from two years of social unrest and the pandemic.

Why is it important: New or renewed agreements could be frozen for a year before increasing 5 to 10% in second and third years as the economy is further boosted by the return of tourists.

Hong Kong’s economy grew by 7.9% in the first quarter of 2021 — the biggest quarterly growth in 11 years and the end of six quarters of recession. Retail sales are also gaining pace; sales in the first four months of 2021 have grown an estimated 8.5% year-on-year.

Earlier this year, rents in Hong Kong fell to their lowest levels since 2003 and brands from Prada to Rolex shuttered key boutiques over the pandemic. Major retail streets including Causeway Bay’s Russell Street faced an all-time high vacancy rate as a result of the exodus.

Hong Kong Retail Landlords Mull Rent Increases