bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Sandy Li

Hong Kong's retail market is undergoing a dramatic facelift because of the growing might of mainland shoppers.
The currency-driven transformation of the sector is forcing an exodus of noodle-bars and mass retailers selling clothes and shoes from the prime shopping precincts of Tsim Sha Tsui, Causeway Bay and Central, as traditional tenants targeting local shoppers can no longer afford soaring rents. 
Replacing them are shops that sell jewellery and expensive watches targeted at big-spending visitors from the mainland.
Typical of the change, is the expansion by Luk Fook Jewellery, which generates some 60 per cent of its sales from mainland shoppers. The chain has opened three outlets in Park Lane's Shopper's Boulevard beside Kowloon Park in Nathan Road, Tsim Sha Tsui. 
Rival Chow Tai Fook has two stores next to Luk Fook, and Chow Sang Sang and TSL Jewellery are also now located next to each other in the 300-metre shopping lane.
 'The change is being driven by the expensive taste of mainlanders. It is creating a unique shopping district and there is nothing else in the world like it,' said Maureen Fung Sau-yim, general manager of Sun Hung Kai Properties' leasing department. 
 Jewellers were engaged in an intense fight with one another for a slice of the tourist dollar, Fung said.
 'Jewellery stores are jam-packed with mainland tourists. It is not uncommon to see long queues forming at the cashier counters and even insufficient stock for sale. To avoid losing customers, jewellers need more stores to generate higher sales and provide better service.
 'If you don't take up the space vacated by others at higher rentals, your rival will,' she said.
 Ten years ago, said Simon Lo Wing-fai, director of research and advisory at property consultancy Colliers International (Hong Kong), there was a balanced expansion in the market of retailers selling jewellery, electronic products and health foods. 
'But the market changed from late-2005 when we began witnessing retailers selling jewellery and watches growing faster than the other two sectors,' he said.
 Analysts attribute the change to the influx of rich mainlanders. 
 The number of visitors to Hong Kong rose from 15.54 million in 2003 to a record 36 million last year, boosted by the launch by the central government eight years ago of the Individual Visit Scheme that freed mainlanders to travel to Hong Kong individually instead of in groups.
Mainland visitors accounted for 63 per cent or 22.5 million of the total arrivals last year, compared to about 7.5 million in 2003, the Tourism Board said.
 Given the limited prime retail space Lo said it was no surprise that landlords of high-street shops were doubling rents when  leases fell due. 
 But while that was forcing down-market tenants to vacate the premises, the steep rise in rents did not deter jewellery and watch retailers from expanding, and saw Hong Kong ranked as the third most expensive city in the world in which to rent street-level shops last year. 
 'Jewellers can afford to pay higher rents than other retailers since they are capable of generating sales of millions of dollars a day. Some of their watches cost hundreds of thousands of dollars each and stores selling televisions or mobile phones cannot match that selling power,' said Lo. 
More than 85 per cent of customers at Emperor Watch & Jewellery's flagship store in Canton Road, Tsim Sha Tsui, for instance, are from the mainland, and property agents said the jewellery retailer paid a monthly rental of HK$1,500 per sq ft, or HK$3 million for the 1,200 sq ft shop. 
In 2009, Emperor International Holdings paid HK$849 million or HK$695,544 per sq ft for the high-street shop and leased the unit to its sister company, Emperor Watch & Jewellery. The shop was formerly leased to the gift shop, Kalm's. 
Hard Rock Cafe closed its outlet in Canton Road in late 2008 and the space is now leased to international fashion chain H&M.
 Joe Lin, senior director of retail services at property consultancy CB Richard Ellis, said Canton Road was now dominated by luxury retailers and rents in the area had risen nearly sevenfold  to more than HK$1,000 per sq ft in the past five or six years. 
Lin forecast that retail rents in prime districts would increase by between 10 and 20 per cent this year.



Visitors reshaping the retail landscape