Landlords of shopping malls in the New Territories are changing the floor plans of their properties to create larger shops that may be leased to big international brands.
"The redesigns will definitely become a future trend for shopping centres in the New Territories, as big brands would like to capitalise on the strong and growing purchasing power of local residents," said Jeannette Chan, a regional director of the retail department at property agency Jones Lang LaSalle.
International brands such as H&M, Zara, Coach, and Marc Jacobs have already extended their reach to the New Territories, where few global brands had any presence five years ago, she said. More brands were likely to follow the trend.
Henry Lam, general manager for leasing at Sun Hung Kai Real Estate Agency, a subsidiary of Sun Hung Kai Properties, said SHKP would renovate its Metro Plaza at Kwai Fong MTR station, and Sun Yuen Long Centre in Yuen Long, following the successful transformation of its Tsuen Wan Plaza.
"Previously, shopping centres in the New Territories were dominated by small shops and local brands. Residents in Tsuen Wan, Tuen Mun, and Yuen Long had to travel all the way to Tsim Sha Tsui or Central to shop for big fashion brands," said Lam. But with a growing number of younger people lured to the area by more affordable home prices, international brands were likely to follow, he added.
Lower rents in the New Territories are another attraction to global brands wishing to expand their footprint in Hong Kong.
Chan said rents at shopping malls in the New Territories ranged from HK$200 to HK$300 per square foot, compared with HK$500 to HK$800 per square foot at Harbour City in Tsim Sha Tsui.
Hong Kong's population is projected to rise from 2009's 7.0 million to 7.66 million by 2019, according to the Planning Department.
The New Territories will experience the largest growth, with a 10.3 per cent increase to 4.02 million over the 10-year period.
The Department forecast that within the New Territories, Yuen Long New Town will have the highest proportion of younger residents. Over the 10 years to 2019, the number of residents aged between 25 and 29 years will increase by 16.5 per cent to 55,500, and Yuen Long's population will grow from just over 550,000 in 2009, to 663,000 in 2019.
SHKP began a HK$280 million renovation of its Tsuen Wan Plaza in 2009 and the investment appears to be paying dividends already, as it signed up international fashion chain H&M as a tenant in a 20,000 sq ft shop in the mall this month.
It is now in the process of combining more than 10 small shops into three duplex shops, each with a size of 10,000 sq ft, to lease to three new global brands planning to move into the mall. The three shops will be taken up by Bershka, Pull and Bear (both owned by the Spanish Inditex group, which also owns Zara), and Japanese lifestyle store Muji.
The three brands will open their doors for business in the last quarter of this year and the first quarter of next year. Fashion retailers occupy 30 per cent of the 600,000 square feet at Tsuen Wan Plaza.
Rents and shopper numbers at Tsuen Wan Plaza had achieved a "double-digit" growth, said Lam.
SHKP hopes to convince more big brand tenants to sign up for space in its Metro Plaza after the renovation, which would require an investment of at least HK$100 million.