What retail slowdown? India’s ‘Diamond King’ Nirav Modi to launch flagship shop on Canton Road
Billionaire jewellery retailer takes advantage of 20pc decline in rent to unveil Canton Road location in prime tourist hub
Indian luxury jewellery brand Nirav Modi is set to unveil a 3,000 square foot flagship store in 1881 Heritage, a premier shopping arcade at the heart of Tsim Sha Tsui owned by Cheung Kong Property, following a discount on rent of more than 20 per cent from the peak of the market.
Nirav Modi, billionaire founder of the Indian diamond house, also known as India’s “Diamond King”, told the South China Morning Post on Tuesday that falling prime retail rents in Hong Kong had offered an attractive entry point for his burgeoning business in a bid to gain a foothold in greater China.
“We are lucky with this, the rent today is more advantageous than two years ago,” said Modi, noting that the shopping space on Canton Road will be home to his largest jewellery boutique in Asia.
With a lingering economic and tourism downturn, retail sales have seen an 18 month-long decline, with August figures down 10.5 per cent year on year to HK$33.9 billion.
Landlords of high street shops, even those at the most favoured tourist destination along Canton Road, are forced to offer discounts to lure retailers.
Real estate consultant JLL predicted retail rents could tumble by 10 to 15 per cent this year following a 22 per cent slide in 2015. In the first half of this year rents have already declined 10 per cent.
“It took us three years to find the right location in Hong Kong,”said the 45-year-old Modi.“When we started we wanted a smaller store but after the success of the first two stores in the city, I said, let’s go for a flagship,” he said, sitting on a velvet sofa in the spacious VIP room of the Asia flagship outlet.
Now among the Forbes’ list of 100 wealthiest people in India, Modi created his namesake jewellery brand in Mumbai in 2010 following more than a decade in the diamond trade. He has launched eight stores around the world so far, with three in Hong Kong - outnumbering the retail network in his home country of India.
“We would like to have 100 stores by 2025, and next year we are opening between six and eight, including one in Beijing,” Modi said.
Last year, the first Nirav Modi boutique in the city welcomed visitors in the Elements shopping complex, followed by another at IFC Mall in Central this June.
The expansion is in contrast to a bleak picture painted by local jewellery giants such as Chow Tai Fook and Luk Fook, which have struggled amid lacklustre tourist spending, as well as Beijing’s graft clampdown. Against the backdrop of double-digit revenue declines, they have turned cautious about new store openings
Modi believes the local market will bottom out given the cyclical nature of the industry and swelling demand from millennial customers.
“Jewellery sales growth here used to suffer from a high base of comparison, and now it will start going up again,” the Belgium-educated Modi said.“Plus, there are millions of millennials coming in to buy jewellery now.”
CLSA analyst Mariana Kou said in a recent note that although a turnaround in the retail sector was still not on the horizon, she had observed signs of stabilisation in September and October.
“With rentals coming down and base becoming easier going into the second, we expect to see re-ratings [of selected stocks],”she added.