Kowloon sites may relieve retail property shortage
Survey points to the need to identify more commercial space if retail industry is to grow
New and emerging commercial property locations including East Kowloon and the West Kowloon waterfront are expected to ease the shortage of retail space in Hong Kong, according to property consultant Jones Lang LaSalle (JLL).
Other options include redeveloping old buildings to accommodate more retail podiums, and making improvements to poorly designed arcades, according to Tom Gaffney, head of retail at JLL Hong Kong.
The property advisory firm notes in a research paper released yesterday that a real concern exists over the development of Hong Kong's future retail market given the tight supply of retail space in the market. From 2007 to 2011, Hong Kong's total retail sales grew by a compounded annual average of 13.1 per cent, it says, while total retail space increased by a mere 3.9 per cent, or 6.2 million square feet.
New supply of retail space from 2012 to 2016 is expected to show limited growth, with an estimated increase of only 5.4 million sq ft.
"The consequence of the limited retail space supply is significant. Some retailers are unable to attain their ideal location or shop size or both, and as a result they are forced to turn to space on higher floors or pay extremely high rents to secure prime premises," said Marcos Chan, JLL's head of research, Greater Pearl River Delta.
Hong Kong's retail property rents have shown significant growth, with overall rents for prime shopping centres more than doubling from 2003 to 2011, while high street shops recorded an exceptional rate of growth at 180.3 per cent.
JLL nonetheless remains optimistic about the city's retail market. It is projected that the numbers of mainland visitors will grow by between 10 per cent to 15 per cent per annum, and the high income growth on the mainland will translate into higher spending by tourists.
The appreciation of the yuan against the Hong Kong dollar also offers mainland tourists a natural discount of about 20 per cent, it points out. This discount may rise, as some economists forecast the yuan will continue to appreciate at approximately 2.5 per cent a year from 2012 to 2015.