Hong Kong’s cinema sector faces mounting pressure as the lease for the Palace IFC movie theatre in the IFC Mall in Central approaches its year-end expiry and mall management has begun informally sounding out potential replacement tenants for the roughly twenty-thousand square-foot space.

Sources familiar with the situation say the move reflects weaker foot traffic and declining box office performance across the territory’s film exhibition industry, prompting landlords to reassess the viability of cinema operations in premium retail precincts.

The potential closure of Palace IFC comes amid continued contraction in Hong Kong’s cinema landscape, which has seen overall box office revenue fall approximately sixteen per cent year on year to about HK$1.13 billion (around US$145 million) in 2025 — the lowest level in over a decade.

Attendance challenges have compounded high rental costs in key shopping districts, intensifying economic strain on operators.

Industry observers note that the downturn in theatrical receipts has been part of a multi-year decline driven by shifting consumer habits, with the rise of streaming platforms and changing entertainment preferences drawing audiences away from cinema screens.

Even local films that have achieved notable success, including some record-setting releases, have not fully offset the broader market contraction.

Previous years have also seen other cinema closures across the territory, underscoring the sector’s ongoing fragility.

Landlords and property managers in high-end malls are exploring alternative uses for large cinema footprints, considering non-domestic brands or experiential retail concepts that might attract stronger and more consistent customer flows.

While no formal leasing decisions have been announced, the informal outreach suggests a growing willingness to repurpose cinema spaces to align with evolving commercial realities and bolster overall mall performance.