Dan Ryan’s Pacific Place closure is a casualty in Hong Kong’s stubborn pursuit of mainland tourists
Sales from local consumers are stable while sales from mainland’s nouveaux riches is down. It’s time they give us back our shops
Swire set to feel the chill as retail demand weakens
Business headline, March 11
No, this is not another screech at Swire Properties for having kicked out Dan Ryan’s at Pacific Place. Former InvestHK head Mike Rowse whinges on about it so much because it was his favourite eating shop. He put InvestHK into the office floors above just so that he could take the lift straight down to lunch.
Nor is this an echo of all the complaints I have heard from brokers over the last two years about how Swire Props also kicked out Domani’s. If they think they can do a better job than restaurateur J.R. Robertson at running restaurants, let them try. I doubt they can.
My point is rather that the real news in our report on Swire Props’ earnings came in a short paragraph further along – “Meanwhile Cityplaza in Taikoo Shing, also controlled by Swire, which caters to local consumers, saw stable sales.”
It’s not only Cityplaza. As the first chart shows, the underlying point is confirmed in the quarterly gross domestic product figures. Consumer spending by non-residents, predominantly mainland tourists, is plunging while sales to local consumers remain remarkably steady.
It has been years since I saw anything that I wanted to buy in Pacific Place and if Swire Props now finds that a glossy mall it Gucci-fied on behalf of the mainland nouveaux riches is no longer a draw then I shall join my voice to the chorus – “Give us back our shops.”
The government has a different solution, of course. Governments never change their ways and the glorified estate agent who nominally heads ours is still valiantly pulling the mainland lever. He wants Beijing to allow individual visitors from more mainland cities.
It won’t work. Leave alone that poorer cities are hardly good prospects when people in even the richer ones are tightening their belts, mainland tourists have now discovered Japan with visit numbers up almost tenfold in the space of just two years. Our tide is out. It may not come in again for a long time.
I cry as few tears for the tenants as for the landlords. Shopkeepers all complain of rent demands that are out of touch with the real world but, while it is true here and there, the figures say that overall it is not.
As the second chart shows, average retail rents have gone up about 50 per cent over the last six years but average retail sales have doubled. To the retailer’s plea that the government do something I ask, “And what did you do for us when the sheep lined themselves up outside your doors for the fleecing?”
The impact of a slowdown in tourist spending is in any case much overstated. Tourists buying imported goods and taking them straight out again do little for economic growth and the jobs involved are mostly menial, low-paid ones. We do not really need to create jobs anyway in a time of full employment.
Only airlines, shop landlords and hotelkeepers really benefit and here is my advice to them: If you feel the chill, fellas, go to Bali.