Hong Kong’s Biggest Mall Amps Up Luxury Appeal to Compete for Shoppers

The lengthy strains of shoppers outdoors Chanel and Louis Vuitton shops on Hong Kong’s Canton Highway are lastly again, and town’s greatest mall operator is making an attempt to get them to spend like earlier than.

After the border with mainland China reopened 4 months in the past, town is seeing a return of vacationers, a lot to the reduction of shops and their landlords. However the legacy of years-long Covid controls, the prevalence of e-commerce and competitors from different Chinese language areas like Shanghai and Hainan are threatening Hong Kong’s retail property house owners and their tenants.

No different mall symbolises Hong Kong’s attraction as a procuring paradise greater than Harbour Metropolis, the biggest within the metropolis. The sprawling complicated going through Victoria Harbour has lengthy established itself because the go-to vacation spot for Chinese language vacationers prepared to purchase Hermes baggage and Rolex watches.

Because the border reopened, Harbour Metropolis has seen gross sales and foot visitors return to greater than 70 % of their peaks in 2019, in accordance with Yen Thean Leng, government director at Wharf Actual Property Funding Co., which owns the property. She expects extra to come back.

Potential gross sales are being hindered by town’s restricted flight capability and lingering product provide points for manufacturers, which might be resolved, in accordance with Leng. “That’s why we really feel that that is nonetheless not the height,” she mentioned in an interview. “We consider that there’s nonetheless a window for extra development.”

Wharf might want to work lots more durable on Harbour Metropolis’s proposition in contrast with the outdated days when mainlanders splurged on visits.

Whereas Hong Kong’s retail gross sales recovered to achieve 2019′s ranges in April, the quantity was 4 % decrease than in January, the month earlier than the border with mainland China reopened. That means the affect of Chinese language consumers on Hong Kong’s retail market was not as nice as beforehand hoped. Customer numbers from mainland China have been simply 54 % of 2019 ranges in April, in accordance with the Hong Kong Tourism Board.

There are additionally rising indicators that individuals are doing extra of their procuring on the mainland. A current examine discovered that 62 % of luxurious spending by Chinese language shoppers befell inside its borders in April, in contrast with 41 % in the identical month in 2019.

That’s why the flexibility to acquire unique gadgets is turning into extra essential. A key remit for Leng is strengthening relationships with the manufacturers which can be well-liked with consumers, not simply from the mainland however Hong Kong as properly.

“Native clients are simply as essential,” mentioned Cynthia Ng, head of retail providers at property company Colliers Worldwide Group Inc. Manufacturers which have expanded sooner than others just lately are these which can be well-liked amongst locals, resembling Chanel, she added.

China’s weakening economic system has prompted mainlanders to turn into extra cautious about spending.

Mainlanders “are extra value delicate now,” mentioned Diana Hui, managing director at Parfums Christian Dior Hong Kong Ltd., Dior’s native fragrance and cosmetics arm. “You possibly can test the value on-line to seek out promotions. So they might have a tendency to buy round earlier than they decide.”

All this implies landlords like Harbour Metropolis have to do far more than supply area. The mall, with an space of two.1 million sq. ft (195,000 sq. meters), has meticulously curated the road of luxurious outlets going through Canton Highway. The 530-meter “excessive vogue frontage” options all the large names, together with Hermes, Dior, Chanel, Louis Vuitton and Prada. The flagship shops supply unique or restricted merchandise, giving consumers a purpose to go to that exact location.

Moody’s Buyers Service expects annual retail rental earnings for Harbour Metropolis to develop as a lot as 15 % in 2023 and 2024. That might be a welcome turnaround for Wharf, whose income slumped 22 % final yr when vacationers have been absent.

Leng isn’t complacent. “For those who’re not doing one thing, you may’t actually survive with simply offering the area.”

By Shawna Kwan