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Exterior of D2 Place Two, one of the two shopping centres built by Lawsgroup, in Lai Chi Kok. Photo: Xiaomei Chen

Hong Kong group plans expansion of D2 Place with redevelopment of industrial building into office tower amid retail slump

  • Lawsgroup plans to redevelop an industrial building into a 27-storey office tower next to its D2 Place One and Two shopping centres in Lai Chi Kok
  • Shopping centres in Hong Kong have seen an increase in traffic in September as government relaxed restrictions, Savills said

Lawsgroup is pushing ahead with the redevelopment of industrial buildings into offices and shopping centres even as Hong Kong’s economy and retail sector still reel from the coronavirus outbreak.

The building in Lai Chi Kok, West Kowloon, right next to its D2 Place One and Two shopping malls, will be redeveloped into an office tower with a major retail component, said Bosco Law Ching-kit, deputy chairman and chief executive of the closely held Lawsgroup, adding that he hopes to link the three buildings with a footbridge, turning it into one big complex.

“It would be ideal to connect the buildings with a sky bridge on the second or third floors. It would benefit the neighbourhood as a whole,” said Law, whose company has interests in textiles, retail and property.

Lawsgroup bought the building, situated on 822 Lai Chi Kok Road, in June last year for around HK$1.4 billion (US$180.6 million), and plans to spend a total of HK$3.1 billion on the project. The new office tower will consist of 27 floors covering a total gross floor area of 18,983 square metres and include four basement floors for parking cars.

Bosco Law Ching-kit, deputy chairman and CEO of Lawsgroup. Photo: Winson Wong
Lawsgroup spent HK$600 million to turn two family owned factory buildings in Lai Chi Kok into D2 Place One in 2012 followed by D2 Place Two in 2016.

“The first two floors of the building will consist mainly of food and beverage outlets and restaurants,” he said.

Retail sales fell 13.1 per cent year on year in August to HK$25.6 billion, taking the overall decline to 30.2 per cent in the first eight months of the year from the year-earlier period, government figures show.

Law said the slump in the city’s retail sector was part of the economic cycle, and while there would be some changes to the retail industry as a result of the coronavirus outbreak, the tough times would pass.

Lawsgroup’s corporate history is a tale of flexibility, globalisation and now diversification

“Business for some retail tenants has already bounced back in September to normal levels, with some actually doing even better than before,” said Law.

Boosted by the incentives given by landlords and a marginal easing of government restrictions in early September, some shopping centres have seen higher traffic on the weekends, according to property consultancy Savills.

“While this is a very difficult situation to paint pretty, there were some early signs of returning activity in late September and a clearer picture of the new normal is beginning to emerge,” said Simon Smith, senior director of research and consultancy at Savills.

Savills expects retailers in the New Territories and Kowloon to recover faster from the slump compared to businesses in other parts of the city once same-day mainland visitors return after border restrictions are eased.

Sun Hung Kai Properties said 15 of its major shopping malls, including apm in Kwun Tong, Tai Po Mega Mall, and Metropolis Plaza in Sheung Shui, had seen an increase in footfall over the Mid-Autumn Festival holiday from October 1 to 4. The flow of visitors increased 30 per cent over the holiday, from the average level over the weekends in September.

Sino Group said visitors to its three major shopping malls – tmtplaza, Olympian City and Citywalk – rose by about a third over the holiday compared to weekends, while sales jumped as much as 30 per cent.

The government had announced a revitalisation plan for industrial buildings in October 2009. It allowed changes in their use for office, retail or hotel purposes but was stopped in 2016.

A new scheme was announced by Chief Executive Carrie Lam Cheng Yuet-ngor in October 2018, which allows for an extra 20 per cent in gross floor area during the conversion of industrial buildings built before 1987 for commercial purposes outside residential areas.