Luxury brands are making way for Hello Kitty in HK malls

Monthly rents are lower there in part because landlords also receive a portion of sales receipts as part of a tenant's payment.

Another source of the slowdown is that Chinese mainland shoppers, who represent 10 percent of global tourism and more than 25 percent of luxury spending, are forsaking Hong Kong in favor of Europe, South Korea and Japan.

They are attracted by weaker currencies and relaxed visa procedures, according to Bloomberg Intelligence. A rising backlash against mainland tourists has also taken the gloss off Hong Kong's appeal, said CBRE's Chan.

Next year, Jones Lang Lasalle expects street rents in Central to drop a further 10 percent after falling about 20 percent to 30 percent in 2015.

Leases on more than 200,000 square feet of space on Queen's Road in Central, one of the city's premier shopping destinations, will become available between now and 2018.

Just steps from one of Hong Kong's busiest subway stations in Central, affordable fashion brand Folli Follie opened a store in mid-October after luxury watch retailer Carlson moved out.

Hennes & Mauritz AB is also taking advantage of falling rents to expand. On Oct 30, it opened a four-story H&M flagship store, its largest in Asia, in Causeway Bay.

"One part of our expansion strategy is about getting a good and competitive deal," Magnus Olsson, the Swedish retailer's country manager for greater China, said, declining to provide rental details. "If we were not happy, we wouldn't have opened."

Helen Mak, senior director of retail services at Colliers, pointed out that while Hong Kong's superior level of service will continue to attract tourists, they are looking for a different shopping experience on the city's high streets.