Causeway Bay rents set to continue upward march
Rents in Causeway Bay - the third-most expensive retail precinct in the world - look set to rise further as more big-name international brands are drawn to open for business in three new upmarket developments destined for the area.
First to open will be Hysan Development's 710,000 sq ft Hysan Place, at 500 Hennessy Road. The project is due to be completed in the second quarter of next year.
Soundwill, meanwhile, has a 148,800 sq ft 'Ginza-style' commercial project in mind for its site at 1-29 Tang Lung Street, one block from Hysan Place. The project is due for completion in 2013. And behind the area's landmark Sogo department store, the 46-year-old residential block Central Mansion, at the junction of Cannon Street and Jaffe Road, is to be knocked down to make way for another 'Ginza-style' project - a 230,000 sq ft development by Phoenix Property Investors.
Together, the three projects will increase the supply of retail space in the area by more than 1.08 million square feet in the next three years.
'Causeway Bay will have its biggest facelift since the opening of Times Square [in 1994] as there has been no new supply for nearly two decades now,' Soundwill director Victor Chan said. He said the total investment in the Soundwill project would be HK$1 billion.
The group began assembling its site at Tang Lung Street in 2005 and three years later completed taking ownership of properties located at 7-19 Tang Lung Street for HK$490 million through a compulsory sale. It has since gradually expanded the site to its present 12,500 square feet.
Chan said Times Square had become a Causeway Bay landmark and transformed the area into a shopping and nightlife district. A Mecca for cashed-up mainland visitors, Russell Street, in the heart of Causeway Bay, is the world's third most expensive retail precinct after Manhattan's Fifth Avenue and Avenue des Champs-Elysees in Paris, according to Colliers International.
Soundwill's headquarters, Soundwill Plaza, is at 38 Russell Street. 'Our proposed Ginza-style plaza is located at the back of Soundwill Plaza and will definitely benefit from the change,' Chan said.
Dickson Lau, financial controller at Soundwill, said two street-level shops in Tang Lung Street sold for HK$185 million and HK$147 million in October last year. 'Excluding the above-ground space, the transaction prices will value our ground level shops in the proposed Ginza-style plaza at HK$1 billion at least,' he said.
Meanwhile, Emperor International said it paid HK$1.1 billion for retail properties at 22-24 Russell Street in July last year. Combined with adjoining retail space at 20 Russell Street, it will be a 3,200 sq ft site suitable for use as a flagship store.
Jeannette Chan, a regional director of the retail department at Jones Lang LaSalle, said retail rents in Causeway Bay would continue to soar. 'Retailers can afford to pay higher rent as long as the shops generate business,' she said. 'With more new international brands likely to set up their flagship stores there, they will certainly draw more shoppers.'
Among the retailers due to open in the area is US fashion chain Forever 21, which will open a 51,188 sq ft store in Capitol Centre after it signed a leasing contact of HK$11 million a month. Hysan Place will also bring in new retailers, including Taiwan's Eslite Bookstore, computer giant Apple, and duty-free outlet DFS.
The quarter-on-quarter average increase in retails rents in Causeway Bay in the third quarter, according to Colliers