Hong Kong’s changing retailing landscapeJanuary 23, 2014 / By
Hong Kong’s retailing landscape is changing. With the competition for space in the city’s traditional retail districts–Central, Causeway Bay, Tsimshatsui and Mongkok–driving rents to eye-watering levels, foreign retailers are increasingly shifting their focus to shopping centres in the New Territories. Fast fashion brands such as Uniqlo, Gap, H&M and Zara have been leading the trend but others are following.
In addition to capturing a share of the growing Mainland-shopper market, retailer interest is also being attracted by growing local populations resulting from the completion of new residential developments. Indeed, while much attention is usually centred on the spending of Mainland tourists, the fact that spending by local Hongkongers accounts for close to 65% of the retail market is often overlooked.
Moreover, the push into these locations has been facilitated by the completion of new high-quality shopping centres such as V-City in Tuen Mun and Popcorn in Tseung Kwan O and the refurbishment of older shopping centres such as TMTP in Tuen Mun and New Town Plaza in Shatin, to name a few.
With so many options, how does a retailer choose between the many new and refurbished shopping centres opening across Hong Kong?
Using the supply of private residential units as a proxy for population movement, we can see that many of the districts that have recorded the highest growth since 2000 have also been districts where we have seen a notable pick-up in demand for space from foreign retailers; with most of the fast fashion brands highlighted above already having established a presence in these districts.
Since many of the shopping centres in these districts cater to the local population, we can use the private residential supply pipeline for the next five years to gauge future retailing demand across the city.
From this perspective, we can expect a growing number of foreign retailers to open new stores in districts such as Tseung Kwan O, Yuen Long and Ma On Shan. Of course, shopping centres that are also closer to the city’s border crossing points with Shenzhen will also have the additional benefit of attracting spending from Mainland Chinese shoppers.
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