Shopping centres are set to benefit from an influx of international fashion brands that have opened their first stores in Hong Kong with the ultimate aim of breaking into the mainland market, according to the Institute of Shopping Centre Management. And fashion retailers who have gone flat-out in their mainland expansion are now refocusing on Hong Kong, says institute chairman Maureen Fung Sau-yim. These moves will become key growth drivers for an industry already benefiting from a developing rail network, according to Ms Fung, who forecasts that the average mall rent will rise 15 per cent to 20 per cent this year. With the economy picking up and consumers carrying fatter wallets, mall retailers are more willing to pay high rents than in previous years. These reasons help to explain how Hong Kong can accommodate an increasing number of shopping centres, particularly in Kowloon, and the 15 per cent surge in overall rents last year. Developers, on the other hand, are increasingly keen to open shopping malls because retail rental returns are better than those from office developments, Ms Fung says. Retail space grew 13 per cent at major Kowloon shopping centres - each offering more than 400,000 square feet of retail space - with Langham Place opening in Mongkok with 600,000 sq ft and APM in Kwun Tong with 630,000 sq ft. East Kowloon is set for another major jump in available retail space with next year's opening of Megabox, a Kerry Properties mall development in Kowloon Bay offering 1.1 million sq ft of retail space. This alone will increase Kowloon shopping mall space - currently about 10.83 million sq ft - by more than 10 per cent next year. Ms Fung says there has been a significant increase in the number of international fashion brands opening or announcing intentions to open their first Hong Kong stores recently. 'They are doing this as a stepping stone into the mainland market. They need to come here and hire people who are familiar with the mainland retail sector,' says Ms Fung, who is also leasing general manager at Sun Hung Kai Real Estate Agency. An example of this is Australia's leading home improvement retailer Spotlight, which will open its first Hong Kong store in Megabox. Spotlight has indicated its aim to break into the mainland and Taiwan markets, but has not announced a timetable. Ms Fung says that while some fashion brands, including Bossini, Baleno and Esprit, switched their attention to growing their mainland operations a few years ago, their recent expansion in Hong Kong shows they are shifting their focus back on the city. 'They realise that Hong Kong is still very important for gathering information on the region, such as India, where the retail market is set to experience a boom,' she says. 'They may also find that the market is so large and gaining market share is not easy.' However, the boom in Hong Kong's retail sector is pushing bigger tenants, including cinemas, out of shopping malls. The latest case is the AMC cinema complex in Swire Properties' Festival Walk in Kowloon Tong. The complex has 11 cinemas, which will drop to seven after its renovation is completed. AMC also moved recently into a part of the premises previously occupied by the UA Cinema complex at Pacific Place in Admiralty. But the area is much smaller because landlord Swire Properties plans to convert 5,000 sq ft of the old cinema lobby into fashion retail space. Other casualties are New York Cinema in Causeway Bay Plaza Two, which shut down last month because of rising rents, and the Lee Theatre, also in Causeway Bay and owned by Hysan Development, which closed down last year to make way for a restaurant. Ms Fung says many malls are finding ways to distinguish themselves from each other, with some trying to attract specific types of tenants and others coming up with creative promotional tactics. She says that, for instance, it is clear that Megabox aims to cater for family shoppers, with its major tenants being home store giants such as B&Q Asia and Spotlight. Cityplaza at Taikoo Shing last year displayed skeletons of dinosaurs, which successfully drew thousands of people. Earlier, Pablo Picasso's largest masterpiece, Parade, was displayed for 20 days at the IFC shopping centre in Central, attracting nearly two million people. 'Ultimately, they are targeting the kids. That is why exhibitions at shopping malls tend to be educational,' says Ms Fung. But she says not every exhibition is a success, citing the Wonders of the Human Body Exhibition last year at the Metropolis Mall in Hunghom that failed to draw a big crowd. Also becoming more popular with landlords is turnover rent rather than fixed rent. Ms Fung says 30 per cent to 40 per cent of shopping malls, including those of Sun Hung Kai Properties, are charging turnover rent. But it is not only developers who are eager to capture every dollar spent by shoppers. The Hong Kong International Airport, long seen as a listing prospect on the stock exchange, is also rubbing its hands at the thought of opening SkyPlaza, a $2 billion complex that comprises about 400,000 sq ft of retail and entertainment space, this year. While SkyPlaza will surely be the focus of the sector this year, critics have expressed doubts about whether local people will regularly shop on Lantau Island, which is well away from the main Hong Kong urban area. Jolyon Culbertson, Swire Properties director and general manager, has said that SkyPlaza would not be a competitor to Citygate, Swire's shopping mall in nearby Tung Chung. 'Citygate appeals to the local community in Tung Chung, so there will not be any need for them to go shopping at the airport,' he says. 'I have reservations about SkyPlaza. I think it's going to be interesting to see whether people will want to shop there or not.' Ms Fung says it is clear that SkyPlaza is positioned to cater for transit passengers and business travellers. But she says the shopping mode of these passengers is different from traditional tourists and local residents. Just how SkyPlaza woos these customers remains to be seen, she says.