In a remarkable turn of events for Hong Kong's retail landscape, a local pharmacy has opened its doors on Russell Street in Causeway Bay, seizing the opportunity presented by a staggering 46% decline in rental prices since 2018. This space was previously home to the luxury lingerie brand La Perla.

Yu Shing, the owner of the newly minted pharmacy, is reportedly set to pay around HK$1 million (approximately US$129,000) per month for the coveted spot at 22-24 Russell Street, according to unnamed property agents.

La Perla, which once held a long-term lease worth HK$7.5 million monthly in 2015, vacated the premises in September 2020 as the COVID-19 pandemic took its toll on retail. Since then, the property owner, Emperor International, has opted to lease the location to various pop-up stores on a more flexible, short-term basis.

The arrival of Yu Shing symbolizes a broader shift in Causeway Bay's tenant mix, reflecting the ongoing transformation in Hong Kong's retail sector as economic conditions shift, along with changes in consumer spending habits. Once a prime location for luxury brands, Russell Street has now opened its arms to more affordable retailers.

Historically, tenants in this bustling shopping district paid as high as US$2,671 per square foot in annual rent at the market’s peak in 2018, ranking Russell Street ahead of global retail hotspots like the Champs-Élysées in Paris and Fifth Avenue in Manhattan. Yet, the average cost tumbled to just US$1,430 per square foot last year.

To emphasize the scale of the downturn, Cushman & Wakefield reported that overall rental prices in Hong Kong's four major shopping areas plummeted between 29% to 47% from 2019 to 2023.

The undeniable impact of these economic changes is evident as high-end retailers including Burberry and Kiehl's have exited the Causeway Bay scene, making way for an influx of mass-market tenants like cosmetic chains and mobile accessory stores.

As of February, Hong Kong's retail sales continue on a downward spiral, marking the twelfth consecutive month of decline with a 13% drop year-on-year, further emphasizing the need for adaptation in this ever-evolving sector.

According to Martin Wong, senior director at Knight Frank, the city’s retail industry heavily relies on spending from local and mainland Chinese tourists, making it crucial for businesses to adapt to changing demands in order to survive.

Following this trend, Futu Securities has also secured a street-level shop on Russell Street, with reports suggesting a rental price of HK$1.2 million a month—a sign of the shifting landscape as newer businesses replace those unable to withstand the pressure of soaring rent and changing consumer behaviors.