Citygate Outlet team bids for another site at Tung Chung

The same team that runs the outlet shopping mall in Tung Chung is bidding for a site nearby

PUBLISHED : Tuesday, 12 March, 2013, 12:00am
UPDATED : Tuesday, 12 March, 2013, 5:46pm

A friend recently paid a visit to Citygate Outlet shopping mall in Tung Chung. She thought she was in Canton Road, Tsim Sha Tsui.

Shops selling designer fashion brands and sports items, including Burberry, Coach, Levis, Polo, Nike and Adidas, were jam-packed with mainland buyers.

Some of the mainland shoppers were in such a hurry to take the last cross-the-border bus that they simply removed their shirts to try on anything they took from the shelves, instead of lining up to enter the fitting rooms.

Most were same-day travellers, who take the cross-border bus directly to Tung Chung. First they take a 25-minute scenic trip via the Ngong Ping 360 cable car to the famed Po Lin Monastery and the Big Buddha, then they end the day by shopping at the outlet mall, before returning home in the evening.

With the outlet mall offering goods at 30 per cent to 70 per cent year-round discounts, it manages to lure an increasing number of mainland shoppers from traditional shopping districts such as Causeway Bay.

No doubt the cash registers of retailers at Hong Kong's first outlet mall, which is owned by a five-strong consortium made up of Swire Properties, Sun Hung Kai Properties, New World Development, Henderson Land Development and Hang Lung, rang up strong sales.

Last Friday, the same consortium submitted a bid for the nearby commercial site in Tung Chung, which is also believed to be earmarked for a shopping centre.

The consortium's bid for the site was estimated at HK$1.1 billion. That is not as eye-catching as the luxury residential site in Ho Man Tin that is expected to fetch bids of between HK$11 billion to HK$14.8 billion but, given its location, it could be very lucrative.

Observers believed the teaming up of the five heavyweights could expand the existing outlet mall business model onto the site.

They would be leveraging on the experience of the existing management team, led by Swire.

Given Citygate Outlet Mall's nearly 10-year record of operation and the close to 80 brands at the mall, it would be easier to line up more retailers for the new mall.

The Tung Chung site is 107,920 square feet. The winning bidder can build a development 70 metres high with a gross floor area of 539,599 sq ft.

This would not be enough to make a local shopping centre economically viable. "In the current highly competitive retail industry, only shopping malls with sizes of 600,000 square feet to one million square feet will survive," an industry practitioner said.

However, it will be a different case if the Swire consortium turns the site into the second phase of Citygate Outlet Mall. That should provide a meaningful synergy to the consortium's existing business.

When the Hong Kong-Zhuhai-Macau bridge is completed in 2016, Tung Chung, the first landing point in the city, will provide ample opportunities for retail development. No wonder the success of the current outlet mall concept attracted a host of other bidders, mostly big developers.

They included Sino Land, Cheung Kong, Wheelock Properties, a consortium of Paliburg and Regal Hotels International, and Dorsett Hospitality.

Others are also looking to similar opportunities. A plan has been proposed by the Lantau Economic Development Alliance, made up of 10 Lantau-based companies and community groups such as Disneyland, AsiaWorldExpo and Ngong Ping 360, to develop Lantau Island into a commercial zone to divert tourists from the busy Causeway Bay and Tsim Sha Tsui areas to the outlying island.