Industrial districts with a retailing twist
Low rents at new malls converted from old industrial buildings lure small shops
As a shopaholic, I am happy to get my fashion fix from the international brands that have been drawn to Hong Kong in the wake of an influx of mainland tourists. I am thinking here of Gap, Topshop and Abercrombie & Fitch, not to mention my favourite patisserie Laduree.
But there is a downside. Rents in the prime shopping districts have surged, forcing many local retailers to close or set up in cheaper areas.
The upshot is that the tenant mix in these prime districts, such as Causeway Bay and Tsim Sha Tsui, is fast losing its variety. Instead of diversity, you have businesses targeting mainland shoppers, such as sellers of jewellery and luxury watches, cosmetics shops and pharmacies. It is difficult for small or new operators to compete in this changed landscape.
But a welcome change is under way, thanks to a government scheme to revitalise industrial buildings. Under the scheme, which began in 2009, industrial buildings can be converted into shops and offices without the need to pay the land premium levy.
This has encouraged landlords and developers to convert their old industrial buildings into other uses, taking advantage of the lower development cost and the fact that rents for shops and offices are usually higher than those for industrial space.
The first shopping centre to emerge from such conversion is D2 Place in Lai Chi Kok, which opened at the end of last month. Sun Hung Kai Properties also plans to convert its Luen Tai Industrial Building in Kwai Chung into a 10-storey shopping centre.
Such conversions are attractive to small retailers, particular those planning to start a business, as the rents are much lower than for shops in core shopping areas. A shop in an industrial building may cost as little as HK$30,000 a month - an unheard-of figure for premises in main shopping districts.
Given these attractions, small retailers have moved to old industrial districts such as Kwun Tong, Chai Wan and Kwai Chung. In Chai Wan, for example, there are now new restaurants, fashion boutiques, bookstores and galleries. Shoppers are enjoying a new experience in the district, with some of the retail diversity that is now lacking in the traditional shopping areas.
Kwun Tong is also enjoying a new lease of life, with a range of retailers setting up shops and several new office developments that have attracted a number of financial institutions over the past few years.
Fortunately, shopping is getting interesting again - and it is no longer confined to the traditional districts.