The spiralling prices of retail shops in Hong Kong have driven investment yields in the sector to unreasonably low levels, according to a veteran retail property investor who has quit the market which he says has become overvalued.

'Retail property is no longer a viable investment vehicle,' said Edwin Leong Siu-hung, the chairman and founder of Tai Hung Fai Enterprise.

Leong made his first street shop investment 11 years ago and until prices outstripped what he believed was a reasonable level, he was an active buyer of retail shops. However, for the past three years he has not added to his portfolio.

The asking price of the shop in Kai Chiu Road in Causeway Bay is about HK$250m, resulting in an investment yield that Leong calculated would have been just 2% or so, against recent historical yields in the sector of about 5%.

South China Morning Post