Chinese New Year in 2016 will mark formal end of golden retail decade in Hong Kong
Chinese New Year in 2016 will mark the formal end of the golden retail decade in Hong Kong, says property consultants.
Better sales are expected to be recorded during the festive season, said Joe Lin, Executive Director, Retail Services, CBRE Hong Kong.
Thanks to the cold weather, clothing and hot pot businesses have seen a better performance recently, he said. But that could not change the overall retail environment.
“We believe more vacancies will appear in high streets after the peak season,” said Lin.
Property experts has predicted one in 10 ground level shops in Causeway Bay - Hong Kong’s glitziest shopping district - will become empty, the highest level since the Sars outbreak in 2003, as a slump in retail sales and tourist arrivals will force several to close down after the Lunar New Year this month.
Hong Kong retail sales last year hit its lowest level since 2002, with a year-on-year decrease of 3.7 per cent, dragging the once-booming retail sector back to a time when the individual visit scheme hadn’t been introduced to the city.
The rental correction will last for another 12-24 months after the final batch of expensive tenancies which were signed during 2014 and early 2015 expire, Lin said.
For shopping malls, Chinese New Year promotions this year have been similar to those in previous years, said Lin.
“Mall business is the business to attract foot traffic, therefore it is always their priority to provide seasonal celebrations and Timely promotions. However, shopping mall landlords now tend to shift back their focus to local consumers in terms of tenant mix, and become less inclined to jewellery and luxury brands,” said Lin.
They are looking for more tenants of life cycle retailer such as Eslite in Cityplaza, new international mid-market fashion brands like Shibuya 109 in Harbour City and specialty food and beverage such as LadyM in IFC mall and Vivienne Westwood Cafe in Ocean Terminal to diversify their tenant mix and cater to local spenders’ needs.
Denis Ma, Head of Research at JLL Hong Kong said landlords at the city’s major shopping centres have been doing their part by rolling out sales promotions to draw in shoppers, but whether this will be enough remains to be seen because of headwinds that continue to hammer the sector.