Mall boss makes space for big ideas
Innovation is key for SHKP's Maureen Fung, who has taken the firm's midnight mall concept to Shanghai, where it is building up its portfolio
As general manager of Sun Hung Kai Properties' leasing department, Maureen Fung Sau-yim has seen the development of a string of new shopping malls over the past decade, each one bigger than the last.
She was one of the key people behind Hong Kong's first midnight mall, the 630,000 square foot APM mall in Kwun Tong in 2005. Then, four years later, she took up the challenge of pre-leasing the 1.1 million sq ft, high-end Shanghai IFC mall project in Lujiazui, Pudong.
When that was opened in 2011, she began pre-leasing another luxury complex, the 1.3 million sq ft iAPM, on Shanghai's busiest shopping strip at 999 Huai Hai Zhong Road. Today, iAPM is fully let, with 10 per cent of its 238 tenants, including Gucci Café, making their mainland debuts.
Fung, founding chairwoman of the Institute of Shopping Centre Management, has more than two decades' experience in retail leasing. She entered the property industry as a management trainee at a private developer and then moved to K Wah Properties before getting involved in the leasing of residential, commercial and industrial property during a two-year stint at Cheung Kong. She joined SHKP - Hong Kong's biggest private mall owner, with a retail portfolio of 10 million square feet - as a senior leasing manager in 1991. SHKP also owns 5.2 million sq ft of retail properties on the mainland, largely from the Shanghai IFC mall and iAPM, with a further 6.6 million sq ft under construction.
In September, SHKP bought an office-retail-hotel plot in Shanghai's Xujiahui district, which will yield 7.6 million sq ft of gross floor space, for a record 21.77 billion yuan (HK$27.8 billion).
However, the mainland luxury sales market hit a snag when Beijing launched an anti-graft campaign. Sales of luxury goods on the mainland were up just 2 per cent year on year last year, to 116 billion yuan, according to global consultancy Bain & Co. It said the central government's efforts to curb the wastage of public money and weed out corruption had had a large impact on "gifting luxury", with watches and menswear having taken the biggest hit.
What is your view on the market outlook for luxury sales on the mainland? How will top-end retailers overcome the challenges?
We remain upbeat about the Shanghai luxury retail market as the growth in personal consumption is exceeding the "gifting market". Chinese consumers remain the world's largest shoppers for luxury goods, with more than 300 billion yuan in spending made outside China last year. It will be an enormous market if they decide to spend at home. An increasing number of global brands have come up with different strategies to lure them to spend more domestically, such as offering limited editions of goods exclusively for the mainland market and offering personalisation services to their VIPs. Some global brands will assign image designers to help them shop for their new collection.
Recently, the Italian brand Valentino for the first time outside Europe offered 22 pieces, each priced from 450,000 yuan to more than two million yuan, of its haute couture collection - referring to the creation of exclusive, custom-fitted clothing - for sale when its 7,500 sq ft flagship store opened at iAPM in November. They sold like hot cakes.
How do the growing number of global brands under your leasing portfolio view the mainland retail market?
The mainland luxury market is definitely their top priority. We've had nine global brands open their flagship stores in the duplex format at our newly launched iAPM in Shanghai. For instance, Italian luxury brand Prada's management team has flown to Shanghai six times to visit the site, monitoring the progress of the decoration of its 1,250 square metre, two-level store.
What is the size of your leasing portfolio?
My leasing portfolio comprises 35 shopping centres covering five million square feet in Hong Kong and on the mainland. Mainland China accounts for 40 per cent of the leasing portfolio, with the rest in Hong Kong. They include APM, the Tai Po Mega Mall, the Sun Arcade in Tsim Sha Tsui, the Shanghai IFC mall and iAPM.
How is the sales performance?
In Hong Kong, sales of the five major shopping centres under my portfolio - APM, the Sun Arcade in Tsim Sha Tsui, Tai Po Mega Mall, Yuen Long Plaza and the New Jade Shopping Arcade in Chai Wan - totalled HK$8.5 billion last year, up as much as 15 per cent from 2012. Sales of the five major malls equalled 2 per cent of the city's retail sales. For the first 11 months of last year, Hong Kong retail sales amounted to HK$444.7 billion.
We've set a four billion yuan sales target for iAPM, which had a soft opening in August, in its first year of operation. The Shanghai IFC mall also aimed to achieve four billon yuan of sales last year.
How does SHKP differentiate its shopping malls and outperform rivals in a highly competitive retail industry on the mainland?
To be an industry leader, we have to do more than just discuss the rent with our tenants inside the office. Besides providing first-class hardware for our tenants, we also need to access their business model and brand strategy while conducting tenant selection. We have visited a sheep farm of an apparel brand in Australia and watch makers in Switzerland. The field trips help us to learn more about their business to see if they have potential for further growth for the next five to 10 years.
What made Sun Hung Kai Properties come up with its late-night shopping concept at iAPM - the first midnight mall in Shanghai?
The location of iAPM is on the corner of Xiangyang Road and Huai Hai Zhong Road, the most upmarket commercial street in Shanghai. It is atop the South Shaanxi Road Metro station on Metro lines No 1 and No 10, which makes it easily accessible from across Shanghai. A third Metro line, No 12, will open this year and will greatly enhance the number of visitors to our mall. Previously, only hot-pot restaurants in Shanghai opened around the clock.
Now, iAPM will change the shopping habits of local residents and the expatriate working population. Our shops will stay open to 11pm, with restaurants extending to midnight, with some even staying open until 2am.