Provisional statistics of retail sales for August 2024
The Census and Statistics Department (C&SD) released the latest figures on retail sales today (October 3).
The value of total retail sales in August 2024, provisionally estimated at $29.2 billion, decreased by 10.1% compared with the same month in 2023. The revised estimate of the value of total retail sales in July 2024 decreased by 11.7% compared with a year earlier. For the first 8 months of 2024 taken together, it was provisionally estimated that the value of total retail sales decreased by 7.7% compared with the same period in 2023.
Of the total retail sales value in August 2024, online sales accounted for 8.0%. The value of online retail sales in that month, provisionally estimated at $2.3 billion, decreased by 0.5% compared with the same month in 2023. The revised estimate of online retail sales in July 2024 increased by 0.8% compared with a year earlier. For the first 8 months of 2024 taken together, it was provisionally estimated that the value of online retail sales decreased by 0.2% compared with the same period in 2023.
After netting out the effect of price changes over the same period, the provisional estimate of the volume of total retail sales in August 2024 decreased by 11.8% compared with a year earlier. The revised estimate of the volume of total retail sales in July 2024 decreased by 13.2% compared with a year earlier. For the first 8 months of 2024 taken together, the provisional estimate of the total retail sales decreased by 9.3% in volume compared with the same period in 2023.
Analysed by broad type of retail outlet in descending order of the provisional estimate of the value of sales and comparing August 2024 with August 2023, the value of sales of commodities in supermarkets decreased by 3.6%. This was followed by sales of jewellery, watches and clocks, and valuable gifts (-24.0% in value); other consumer goods not elsewhere classified (-5.0%); wearing apparel (-13.4%); electrical goods and other consumer durable goods not elsewhere classified (-2.8%); commodities in department stores (-15.8%); motor vehicles and parts (-35.1%); fuels (-9.9%); footwear, allied products and other clothing accessories (-6.3%); furniture and fixtures (-21.3%); Chinese drugs and herbs (-11.9%); and optical shops (-17.0%).
On the other hand, the value of sales of food, alcoholic drinks and tobacco increased by 0.2% in August 2024 over a year earlier. This was followed by sales of medicines and cosmetics (+4.5% in value); and books, newspapers, stationery and gifts (+3.0%).
Based on the seasonally adjusted series, the provisional estimate of the value of total retail sales decreased by 2.0% in the three months ending August 2024 compared with the preceding three-month period, while the provisional estimate of the volume of total retail sales decreased by 2.8%.
Commentary
A government spokesman said that the value of total retail sales recorded a year-on-year decline in August amid the continued impact of the change in consumption patterns, the relatively strong Hong Kong dollar, and increased outbound travels by residents during the summer holidays, among other factors.
Looking ahead, the spokesman said that the retail sector will still face challenges in the near term. Nonetheless, the Central Government's various measures benefitting Hong Kong, as well as the SpecialAdministrativeRegion Government's various initiatives to boost market sentiment and support the development of the sector, would benefit retail businesses. Continued economic growth, rising employment earnings, and an easing Hong Kong dollar exchange rate alongside the US interest rate cut, would also provide support to the retail sector.
The spokesman added that the Hong Kong Trade Development Council has organised the inaugural Hong Kong Shopping Festival in August to help Hong Kong enterprises increase brand awareness and expand into Mainland e-commerce business. The Government will continue to support small and medium-sized enterprises (SMEs), including those in the retail sector, through various measures, including the SME Export Marketing Fund and E-commerce Easy, so as to assist enterprises in expanding their market, as well as encourage enterprises to upgrade and transform their operations and develop e-commerce businesses, thereby promoting more diversified development and new quality productive forces.
Further information
Table 1 presents the revised figures on value index and value of retail sales for all retail outlets and by broad type of retail outlet for July 2024 as well as the provisional figures for August 2024. The provisional figures on the value of retail sales for all retail outlets and by broad type of retail outlet as well as the corresponding year-on-year changes for the first 8 months of 2024 taken together are also shown.
Table 2 presents the revised figures on value of online retail sales for July 2024 as well as the provisional figures for August 2024. The provisional figures on year-on-year changes for the first 8 months of 2024 taken together are also shown.
Table 3 presents the revised figures on volume index of retail sales for all retail outlets and by broad type of retail outlet for July 2024 as well as the provisional figures for August 2024. The provisional figures on year-on-year changes for the first 8 months of 2024 taken together are also shown.
Table 4 shows the movements of the value and volume of total retail sales in terms of the year-on-year rate of change for a month compared with the same month in the preceding year based on the original series, and in terms of the rate of change for a three-month period compared with the preceding three-month period based on the seasonally adjusted series.
The classification of retail establishments follows the Hong Kong Standard Industrial Classification (HSIC) Version 2.0, which is used in various economic surveys for classifying economic units into different industry classes.
These retail sales statistics measure the sales receipts in respect of goods sold by local retail establishments and are primarily intended for gauging the short-term business performance of the local retail sector. Data on retail sales are collected from local retail establishments through the Monthly Survey of Retail Sales (MRS). Local retail establishments with and without physical shops are covered in MRS and their sales, both through conventional shops and online channels, are included in the retail sales statistics.
The retail sales statistics cover consumer spending on goods but not on services (such as those on housing, catering, medical care and health services, transport and communication, financial services, education and entertainment) which account for over 50% of the overall consumer spending. Moreover, they include spending on goods in Hong Kong by visitors but exclude spending outside Hong Kong by Hong Kong residents. Hence they should not be regarded as indicators for measuring overall consumer spending.
Users interested in the trend of overall consumer spending should refer to the data series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product published at quarterly intervals. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (including goods purchased from all channels) and services by Hong Kong residents whether locally or abroad. Please refer to the C&SD publication "Gross Domestic Product by Expenditure Component" for more details.
More detailed statistics are given in the "Report on Monthly Survey of Retail Sales". Users can browse and download this publication at the website of the C&SD (www.censtatd.gov.hk/en/EIndexbySubject.html?pcode=B1080003&scode=530).
Users who have enquiries about the survey results may contact the Distribution Services Statistics Section of the C&SD (Tel: 3903 7400; email: mrs@censtatd.gov.hk).
SFST's speech at luncheon with Hong Kong Real Estate Investment Trust Association
Following is the speech by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at a luncheon with the Hong Kong Real Estate Investment Trust Association today (October 3):
Ladies and gentlemen, esteemed members of the Hong Kong Real Estate Investment Trust Association,
It is both an honour and a privilege to stand before you today as we gather to discuss the vibrant opportunities that lie ahead for our markets here in Hong Kong. As we navigate through a dynamic global landscape, it is crucial to recognise the unique position that Hong Kong holds as a leading financial hub, particularly in the realm of real estate investment trusts (REITs).
Hong Kong: a global financial hub
Hong Kong was recently ranked third globally in the Global Financial Centres Index (GFCI), and ranked first in the Asia-Pacific region. In the ranking of "investment management" our position advanced to first globally, thanks to our strengths as an international asset and wealth management centre with assets under management exceeding HK$31 trillion. This remarkable achievement underscores our status as a beacon for investors seeking stability and growth. The Government has been proactive in enhancing our competitiveness in the asset and wealth management industry, particularly through the development of our REIT market.
In recent years, we have taken significant steps to foster this growth. The Securities and Futures Commission (SFC) has revised the Code on Real Estate Investment Trusts, relaxing investment restrictions and allowing REITs to invest in minority-owned properties and property development projects. These changes are designed to attract a broader range of investors and stimulate market activity.
The current landscape of REITs
Globally, REITs have demonstrated resilience and recovery potential. Recent data from the market shows that global REITs outperformed broader equities. This trend reflects improving investor sentiment as economic conditions stabilise, particularly with easing inflation and expectations of interest rate cuts.
Here in Hong Kong, our REIT market has grown significantly since the launch of the first REIT in 2005. As of August this year, we rank fourth in size within the Asia-Pacific region, with a market capitalisation close to HK$137 billion. The Hang Seng REIT Index has quadrupled since its inception, showcasing the robust growth potential that exists within our local market.
Investor sentiment: a positive shift
After a challenging period marked by rising interest rates and inflation, investor sentiment towards REITs is improving. Many analysts believe that the sector is on the cusp of a recovery phase, with potential for sustained positive performance as economic conditions stabilise. This renewed confidence is essential for attracting both domestic and international investors to our REIT market.
Innovative measures for growth
To further bolster our REIT sector, the Government has introduced several policy measures:
* Grant scheme for REITs: Launched in May 2021, this initiative provides funding support for eligible expenses incurred by REITs listed in Hong Kong. Each REIT may receive up to HK$8 million, and the extension of this scheme until 2027 is a testament to our commitment to fostering a thriving REIT ecosystem.
* Waiving stamp duty: The decision to waive stamp duty on trading REIT units will enhance market competitiveness and encourage more transactions within our financial markets.
* REIT Connect: This initiative aims to expand mutual access between Mainland China and Hong Kong's capital markets. By incorporating REITs under Stock Connect, we are broadening investment options for both local and overseas investors, significantly increasing liquidity and attractiveness.
Facilitating corporate restructurings
Moreover, the SFC is exploring the introduction of a statutory scheme of arrangement and compulsory acquisition mechanism for REITs. These proposals would enable Hong Kong REITs to conduct privatisation and corporate restructuring similarly to other listed companies through a statutory scheme of arrangement. This will provide greater flexibility for REITs in managing their portfolios and responding to market changes.
Sector diversification: embracing new opportunities
As we look ahead, it is essential to recognise the evolving landscape of the REIT sector. Non-traditional sectors such as data centres, healthcare facilities, and logistics properties are gaining prominence due to structural demand drivers like e-commerce growth and an aging population.
The rapid advancement of technology, particularly artificial intelligence (AI), is generating unprecedented demand for data processing capabilities. This presents an exciting opportunity for REITs focused on data centres - an area where we can explore leading the charge.
Moreover, diversification strategies are becoming increasingly critical. Our mature markets are now looking beyond local assets to invest in high-growth sectors globally. This strategic approach not only mitigates risks associated with fluctuations but also enhances overall returns.
The importance of sustainability
In addition to sector diversification, sustainability is becoming a pivotal focus for investors globally. The push towards greener buildings and sustainable practices is not merely a trend, it is a necessity driven by climate change awareness and regulatory facilitations.
Hong Kong's commitment to sustainability can be seen through various initiatives aimed at promoting green building certifications. By investing in energy-efficient properties or retrofitting existing buildings with sustainable technologies, we can attract socially responsible investors who prioritise environmental impact alongside financial returns.
Long-term growth outlook
Looking towards the future, the global REIT market is projected to grow significantly, potentially reaching approximately US$5.8 trillion by 2030 - a compound annual growth rate (CAGR) of around 7.1 per cent from 2023 to 2030. This growth will be driven by ongoing demand for real estate assets coupled with favourable investment conditions.
In Hong Kong specifically, we are well positioned to capitalise on this upward trajectory. Our regulatory environment continues to evolve favourably, encouraging new listings and investments while maintaining high standards of transparency and governance.
Emerging markets: a source of opportunity
We must also consider the burgeoning potential within emerging markets across Asia. Markets like Mainland China and India are rapidly developing their own REIT frameworks, contributing significantly to regional growth. The recent establishment of new regulations supporting the growth of REITs in these regions indicates that opportunities are ripe for exploration.
Strengthening regional co-operation
Moreover, strengthening regional co-operation will be vital as we move forward. By fostering partnerships with neighbouring countries in Asia - such as those involved in ASEAN (Association of Southeast Asian Nations)- we can create synergistic opportunities that benefit all parties involved. Collaborative efforts could include joint ventures or cross-border investments that leverage each region's strengths while mitigating risks associated with individual markets.
Conclusion: a call to action
In conclusion, I urge each one of you - members of the Hong Kong Real Estate Investment Trust Association - to seize this momentous opportunity to drive innovation within our sector. Together, let us embrace these changes and work towards making Hong Kong an even more attractive destination for real estate investments.
The future is bright for our markets. Let us harness this momentum and continue building a prosperous landscape for all stakeholders involved.
As we embark on this journey together, I encourage you all to engage actively with one another - share insights, explore new ideas, and collaborate on initiatives that will propel us forward into this exciting new era.
Thank you.
