Hong Kong retail sector faces structural divergence between rising sales and persistent shop closures

Despite a 10% year-on-year increase in retail sales through May 2026, Hong Kong's retail sector is experiencing a wave of closures driven by stagnant profitability and high operating costs. Tenants report that aggressive price-cutting to maintain volume is eroding margins, while landlords maintain an optimistic outlook on market recovery, creating a significant impasse in lease negotiations.