Hang Lung Properties looks to rental boost from makeover of key HK retail properties

Hang Lung Properties is counting on a HK$500 million makeover of its main retail properties in Mong Kok and Causeway Bay to boost its rental income by up to 60 per cent.

The developer said a decline in luxury spending by mainland tourists would have only a limited impact on its properties, which focus on so-called affordable luxury brands that have been less exposed to the mainland's anti-corruption campaign.

In 2012, Hang Lung launched an eight-year asset enhancement plan under which its retail portfolio of more than five million sq ft will be renovated.

Norman Chan Ka-ngok, the company's director for leasing and sales, said a HK$200 million facelift at Grand Plaza in Mong Kok would be completed this month.

The company's Fashion Walk complex in Causeway Bay - comprising 90 street-level shops mainly on Paterson Street and in Hang Lung Centre - is being spruced up at a cost of HK$300 million. Work is due to end in the fourth quarter.

"We will see 50 to 60 per cent rental income growth in the two retail complexes from next year," Chan said.

While he would not be drawn on the scale of the rent rises faced by tenants at the two properties, he said some tenants at Fashion Walk would be charged double what they had paid in previous leases when the agreements came up for renewal.