Hong Kong'S Retail Market Starts To Transform And Become More And More Differentiated

The crowded Causeway Bay Business District is a competitive place for Hong Kong retailers. The huge flow of people once brought high rents, making it the most expensive area in the world for a time. However, the rents of Causeway Bay Business District have declined all the way in the past two years, dropping by about 40%.

At the same time, the rent of shops in Hong Kong's industrial zone has slowly increased by about 8%. Behind the "sunrise in the east and rain in the west" of the rent of shops in the two regions is the quietly changing territory of Hong Kong's retail industry.

"Can you imagine that the shops in Russell Street are selling profit (red bags)," said a staff member of a Hong Kong property company. Russell Street is located in the center of the Causeway Bay business circle, and once gathered many jewelry stores, watch shops and luxury stores. In 2012, the shops on this street topped the world with an average rent of HK $13000 per square meter per month.

However, in recent years, the rent of Russell Street has been falling all the way. According to the report of Jones Lang LaSalle, a Hong Kong property company, in January this year, the rent of shops in Russell Street has dropped by 37% since the peak in 2014. However, Russell Street "surprised" that the store was closed, which was the result of "leak detection" under the decline of store rent.

Not only in Russell Street, but also in Central and Tsim Sha Tsui: some famous brands luxury goods The store will either rent at a reduced price or be vacant.

According to the data released in March by CBRE, a commercial real estate service company, from 2014 to 2017, the rent of four core business districts in Hong Kong, namely Causeway Bay, Central, Tsim Sha Tsui and Mongkok, has dropped by about 40% from the high level in 2014. Even so, there are still businesses withdrawing, and many stores are vacant due to high rent.

Compared with the core business district, Hong Kong's traditional industrial district is a different scene: more and more shopping malls and retail stores are emerging here. Take Kwun Tong, the most representative industrial zone in Hong Kong, for example. Before 2010, more than 80% of the industrial plants were industrial plants. After 2015, more than 40 commercial projects were settled in succession, and many brands and retailers settled here.

"Different from the situation that there are often vacant shops in the first tier malls in Causeway Bay, tenants are in great demand for these emerging industrial malls (industrial buildings), which can be said to be hard to find," said Lian Zhihao, executive director of CBRE's Store Service Department.

After the Special Administrative Region Government launched the "activation plan" to change or reconstruct the use of the industrial buildings in 2010, many wholesale, creative industries and cultural groups have entered the industrial buildings, and the original stereotyped factories have taken on a new look. In addition to Kwun Tong, this trend also appears in the industrial zones of Cheung Sha Wan, Tsuen Wan and Lai Chi Kok.

according to Hong Kong According to the property report released by the Rating and Valuation Department of the SAR Government, the average rental price of private retail buildings in Kowloon, Hong Kong, rose from HK $1378 per square meter in December 2015 to HK $1494 in January 2017, in sharp contrast to the HK $1625 in Hong Kong Island in the same period, which fell to HK $1398.

"Behind the 'rise and fall' of Hong Kong retail rents is the change in the territory of Hong Kong's retail industry." Lian Zhihao analyzed that most buyers attracted by Hong Kong's core business district are tourists. Hong Kong's tourism industry has been sluggish for the past two years. Many stores in the core business circle have suffered from declining sales performance. They have withdrawn because they can't afford high rents. Owners can only attract new stores to "take over" the stores by reducing rents.

Li Shangwen, CBRE Consulting and Senior Director of Transaction Services Department, said that in Hong Kong's traditional industrial or living areas, the consumption desire of local consumers in Hong Kong has begun to recover in the past two years. Businesses settled here can attract workers or residents in the area on weekdays, and attract people from other areas by holding special fairs, theme carnivals, theatrical film screenings and other activities on weekends consumer Coming.

"2017 should be a year of transformation and recovery of the retail industry in Hong Kong." Lian Zhihao said that the monopoly of luxury groups in the core business district was broken, rent fell, and the rise of middle end mass brands, all of which are benign adjustments to the market.

Lian Zhihao also said that the "pie" of Hong Kong's retail industry has grown. In addition to the shopping malls in the core business districts and new towns (closer to the port), the former industrial parks have also become the new favorites of consumers. Today, the main businesses in traditional business districts are making greater efforts to retain mid tier mass brand merchants. In addition, the core business district should introduce more characteristic, novel and creative shops to attract consumers, not just the same chain stores and luxury stores.

Dong Yaozhong, Director General of the Hong Kong Tourism Industry Council, said that visitors to Hong Kong began to "upgrade". Previously, tourists preferred to buy luxury goods in Hong Kong, but now more tourists like to buy consumer goods such as shoes, hats, cosmetics and drugs. Many tourists are no longer just shopping, but want to experience more of Hong Kong's local characteristics.

Dong Yaozhong said that Hong Kong's tourism industry is making changes under the new situation, exploring a new way of tourism featuring grand events, food and culture, such as experiencing Hong Kong's living quarters, cruise tourism, sea fishing and other special activities. It is hoped that these changes can bring Hong Kong's tourism and retail industry back to the "golden age" again.

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