Luk Fook to expand in prime shopping districts as rent rises ease

Luk Fook Holdings International, the second-largest jeweller in Hong Kong by market value, plans to expand in the city's prime shopping districts as landlords hold back on raising rents.

Landlords were foregoing rent increases or asking for smaller gains when leases came up for renewal, said Luk Fook chairman Wong Wai-sheung.

The company planned to expand in prime locations such as Causeway Bay and Tsim Sha Tsui, where it expected growth in jewellery sales, while closing shops elsewhere, he said.

"Usually when we renew leases for stores that we rented three years ago, we would see a big jump in rent," said Wong. "But we've seen the rental increase slow at many stores. Some landlords didn't even ask for more rent."

Sales at luxury retailers in Hong Kong dropped at least 25 per cent each month in the second quarter as mainland tourists spent less on watches and jewellery.

Luk Fook is adjusting its mix of stores as slowing economic growth and a corruption crackdown on the mainland crimp spending.

A shop under renovation in Tsim Sha Tsui, a district popular with mainland tourists, would become bigger when it reopened before the Christmas holidays, Wong said. The company has opened new shops in Causeway Bay, Mong Kok and Tsuen Wan this year.