Concrete Analysis | Hong Kong’s status as retail hub safe for now
While slowing sales have raised concerns, the city is well ahead of Asian rivals in attracting global brands, with mid-tier labels plotting expansion
Recent market signals have been a wake-up call for some international brands in Hong Kong: total retail sales declined by 0.2 per cent year on year in the first five months of this year, with jewellery and watches, sales of which fell 20.6 per cent, bearing the brunt of the slowdown.
The slowdown in visitor spending, along with pressure on the government to limit the number of visitors from the mainland, have further raised concerns among retailers, especially since mainland tourists contributed about a third of total retail sales in recent years.
Is the picture really that gloomy? Probably not.
A recent survey of more than 100 international and luxury brands by JLL shows that Hong Kong still ranks as the most attractive retail destination for international retailers in the Asia-Pacific, with more global brands choosing to open their flagship stores in Hong Kong than any other location in the region, despite the city's deserved reputation for eye-watering rents.
For example, last year, 40 new brands, including desirable international labels such as Philipp Plein, opened stores in Hong Kong.
The headwinds may put landlords under pressure to reduce or maintain rents
It comes as not much of a surprise that Hong Kong is miles ahead of rival Asian cities in housing international brands, and that the city has the greatest presence of international retailers in the region.