Hong Kong property

Fortune Reit chief Justina Chiu driving change at Tin Shui Wai shopping mall

PUBLISHED : Tuesday, 05 September, 2017, 1:57pm
UPDATED : Tuesday, 05 September, 2017, 7:28pm

Justina Chiu Yu, chief executive of ARA Asset Management, which manages the Fortune real estate investment trust (reit), is driving change at its largest retail asset in Tin Shui Wai to address the growing number of young people moving to the New Territories.

With flat prices in Hong Kong’s urban areas reaching sky high levels, the lower prices in the New Territories are seen attracting younger professionals with higher incomes.

Yuen Long district, which includes Tin Shui Wai, is projected to have the largest population increase of from 2015 to 2024, with an additional 84,100 people, according to the city’s planning Department.

The 36 year old Chiu, who has served as ARA Asset chief executive since February 2015, said the firm plans to revamp its 665,244 sq ft Fortune Kingswood property, with an estimated valuation of HK$7 billion, into a shopping and entertainment hub to serve the greater Tin Shui Wai and Yuen Long area. It is the biggest retail asset among the 17 malls under ARA Asset’s management.

Such a revamp would attract tenants such as gaming stores, boutiques and speciality restaurants that appeal to a younger demographic.

“We aim to bring more exciting experiential elements to Fortune Kingswood and make it a new ‘retail-tainment’ centre,” Chiu said.

“Initiatives will be carried out in phases to minimise disruption to rental income,” said Chiu, who is the daughter of Justin Chiu Kwok-hung.

Justin Chiu, who serves as executive director of Cheung Kong Property Holdings, remains a non-executive directer at ARA Asset after stepping down as chairman of the firm in January 2017.

CK Property is a controlling shareholder of Fortune Reit.

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ARA Asset is also looking into various concepts including the introduction of an “eSports” theme to Fortune Kingswood and is in talks with gaming business operators for potential partnerships.

“While discussions are only at a preliminary stage and nothing has been concluded, we consider the new theme a good fit for Fortune Kingswood to attract the growing young crowd in the fast-developing eSports industry,” said Chiu.

She believes Fortune Kingswood will be an important growth driver for Fortune Reit through what they call “value-added asset enhancement initiatives and tenant repositioning”.

Fortune Reit currently owns a portfolio of 17 retail malls in Hong Kong, comprising 3.18 million sq ft of retail space and 2,713 car parking spaces.

Chiu shrugged off concerns of competition from e-commerce.

“Tenants in more than half of our gross floor area provide services and catering, which cannot be replaced by e-commerce,” she said.

Despite Hong Kong’s slower retail sales growth with tourists no longer buying big ticket items, Chiu was cautiously optimistic about the city’s retail market after it saw signs of mild recovery in March after a two-year slide.

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“It is too early to say Hong Kong retail has seen a complete recovery but we are happy to see stronger demand as a mall operator,” she said.

Hong Kong retail sales in July grew at their fastest pace in more than two years on the back of a stock market boom and rising property prices, potentially signalling the end of a years-long downturn.

Sales jumped 4 per cent compared with July last year, significantly higher than the 0.1 per cent year on year growth in June, government statistics showed in August. Retail sales in the city fell for 25 consecutive months until a mild rebound in March.

Chiu said Fortune Reit’s malls are more resilient to the volatile retail market and are less affected by tourist consumption since their tenants, such as food and drink caterers and supermarkets, have more stable incomes.

“Tenants in more than 60 per cent of our gross floor area cater to local demand,” Chiu said. “We can provide a more stable income to investors than other reits.”