Hang Lung to spend HK$40 million on mall upgrades to woo Mong Kok’s shoppers
Hang Lung’s Gala Place and Hollywood Plaza’s further enhancements will accommodate the changing retail landscape, says Knight Frank
Hang Lung Properties will spend HK$40 million (US$5.1 million) renovating two of its shopping malls in Hong Kong’s bustling Mong Kok area in a bid to enhance rental income in a fast-changing retail landscape.
Bella Chhoa, director of leasing and management at Hang Lung Properties, said the improvements will be carried out over the next two years and will include refurbishment of the facades, lift lobbies and car park exit.
It is the latest in a series of “asset enhancements” the retail landlord launched in 2012. It has completed the renovation of Fashion Walk in Causeway Bay and Grand Plaza in Mong Kok, while improvements are under way at The Peak Galleria mall and Shanghai’s Grand Gateway 66.
The upgrades come in tandem with a gradual restructuring of the trade mix aimed at attracting more young, trendy shoppers, such as those who visit fast-fashion chain H&M at Gala Place.
As part of that effort, the landlord has been insisting its tenants include interactive elements when they negotiate their rental contracts.
“For instance, Kiehl’s, which opened in Hollywood Plaza in December last year, lets shoppers interact by designing bags,” said Chhoa.
She said the investment at Grand Plaza had yielded an occupancy rate of “nearly 100 per cent”, higher rents and a roughly 10 per cent rise in footfall during Lunar New Year.
The three malls in Mong Kok – Grand Plaza, Gala Place and Hollywood Plaza – contributed 22 per cent to the developer’s total gross floor area leasing portfolio in Hong Kong last year.
The investment in refurbishing the shopping centres represents a large sum to the company, considering rental income from its Hong Kong’s leasing portfolio last year only amounted to HK$3.82 billion despite a 2 per cent year-on-year rise.
The company owns an investment property portfolio of about 7 million square feet in Hong Kong and about 25 million square feet spread across eight mainland cities.
Chhoa said the Mong Kok malls boast flagship stores of large brands which have worked closely with the landlord, suggesting retail concepts to boost sales revenue and help secure rental contracts.
“For instance, the Chinese restaurant chain Tao Heung has differentiated its two restaurants in our Grand Plaza and Hollywood Plaza, with one targeting young spenders and another traditional patrons,” she said.
In return for their efforts, Hang Lung will consider offering rental contracts of longer durations and for larger spaces.
Analysts say the revamped malls have so far been a success.
Most noticeable has been the change of tenants to meet shifting consumer tastes, according to Terrence Chan, JLL’s head of retail in Hong Kong.
“The landlord has successfully introduced new brands such as the first flagship store of French sports retailer Decathlon in Grand Plaza last August, which drew new customers,” he said.
With the established prime location of the two shopping malls, a facelift comes in time to stay competitive in the market as well as to accommodate the evolving consumer behaviour and desires, said Knight Frank.