With Hong Kong Disneyland's
official opening next month, investors and landlords in Causeway Bay are
eyeing part of the chunk of money to be splashed out by the expected huge
influx of tourists.
"Tourism will play a bigger
role in retail sales. Tourist spending in the sector had grown from 12
percent in 2000 to 20 percent last year," property consultant Jones
Lang LaSalle said in research report last month.
According to the company's head of
research for Greater China (South), Kenneth Tsang, capital values for street
level shops in Causeway Bay have risen by 18.8 percent in the first half of
this year while rents have gone up by 17.5 percent. He expects capital
values and rents to climb by 5 to 10 percent in the second half.
Vigers Appraisal and Consulting
executive director Tony Chan was even more bullish.
He said capital values had risen
by 30 to 40 percent in the first half with another 20 percent likely in the
Midland Realty shops department
marketing manager Tommy Lai said rents had risen by 20 to 30 percent in the
first half and are expected to surge another 30 to 50 percent in the second
half for units in prime locations like Russell Street and by 15 to 25
percent for those in secondary locations like Yun Ping Road.
He said rents usually ranged from
HK$300 to HK$1,000 per square foot in the Causeway Bay area, with bigger
shops offering lower rents per square foot on average.
Midland's shop sales manager, Eric
Ng, said rent increases were incredible. For instance, a shop near Sogo
Department Store, measuring about 300 square feet was recently leased for
HK$320,000 a month or about HK$1,067 psf. "This is the most expensive
I've seen," he said.
On Russell Street, the owner of a
600 sq ft shop commanding a monthly rental of HK$230,000 is now demanding
HK$420,000 or HK$700 psf.
On the same street, The Body Shop
is paying HK$450,000 a month for an 800 sqft shop. By comparison, rents at
shopping centers like Times Square or Lee Gardens are about HK$50-60 psf for
restaurants and up to HK$200 psf for fashion retailers, according to
Colliers senior manager for retail leasing Helen Mak.
She said landlords are now banking
on the opening of Disneyland, Mitsukoshi Department Store moving out to make
way for smaller shops and plans for future pedestrian only zones at
Jardine's Bazaar. "If consumer spending power had not been that strong,
the asking price [for shops] would not have hit new records," Ng said.
He said investors are desperate to
get a piece of the action as the value of the shops are unlikely to drop to
However, Vigers' Chan preferred to
play down the Disney factor, saying Beijing's easing of restrictions on
travel here by mainlanders has contributed significantly to the SAR's
buoyant retail industry.
"Causeway Bay is a must for
tourists for shopping," Chan said.
Furthermore, rent rises could not
be linked to speculation by investors.
"The leasing market is really
closely linked to tenants' ability to pay. The owner may ask for more, but
if they can't afford pay, there's no point," he said.
Referring to Mitsukoshi's
relocation plans, he said any large increase in the availability of shops
would relieve pressure on rents, but rents are unlikely to drop.
Ng said it was a sellers' market
and landlords' past practice of making contributions to a tenant's
renovation costs are a thing of the past.
"It's `do you want it or not?
If not, then take a walk,"' Ng said. -
by Danny Chung THE
STANDARD 26 Aug 2005
shop rents lead Asia
Causeway Bay has again been ranked
the most expensive retail location in Asia, with high rents sustained by the
influx of mainland tourists and improved consumer confidence, a global
survey reveals according to an article published in THE
Retail rents in Causeway Bay
ranked third highest in the world, following New York's Fifth Avenue and
Paris' Avenue des Champs Elysees, real estate consultant Cushman &
Wakefield Healey & Baker said.
Leasing a shop in Causeway Bay
costs an average of US$569 (HK$4,438) per square foot a year, compared to
US$950 psf at shops between the 50th and 59th Street at New York City's
Fifth Avenue, which ranked No.1, Cushman & Wakefield's 2004 annual
``Improvements in consumer
confidence and strong recovery in the tourism industry have been the main
drivers behind the sharp rental growth in Hong Kong since the Sars epidemic
last year,'' said the firm's Asia research director John Su.
Retail rents in Causeway Bay have
risen by 54 per cent as the relaxation in visa requirements for tourists
from mainland China has benefited the retail sector since July 2003.
The survey tracks retail rents in
the world's top 229 shopping locations in 45 countries. ``Most countries in
the region have experienced solid economic recovery over the past 12 months
and many international retailers have reacted quickly to expand their
presence in places like Hong Kong, Japan and Singapore,'' Su said.
Cushman & Wakefield's head of
research David Hutchings expected healthy economic growth rates to bring
confidence to retailers, but warned inflationary effect of rising oil prices
would put further upward pressure on interest rates. - 2004
September 28 THE
Causeway Bay shop sale
price bucks gloom
A Causeway Bay shop has bucked both the depressed retail market and the
downturn in property to fetch the second-highest price for retail space in
the past two years.
Henderson Land Property sold the
street-level shop in Chee On Building, East Point Road, for HK$71,000 per
square foot on Saturday.
With a net floor area of 291
square feet, or 416 sq ft in gross floor area, the shop sold for HK$29.6
The net floor area price was
HK$100,000 psf, making it the second priciest piece of retail space after a
Russell Street, Causeway Bay, shop unit sold in March this year for
The present tenant, Sunday
Communications, pays a monthly rent of HK$180,000 for the East Point Road
FPDSavills, which expects rents to
weaken for the remainder of this year because of the generally weak
fundamentals, said retailers are trying to establish themselves in
traditional prime locations. ``The poor economy continues to suppress
consumption and most retailers have chosen to sit on the sidelines,''
FPDSavills research manager Simon Smith said.
``Nevertheless, strong rental
polarisation remains and a shop in core Central [shopping centre frontage]
was recently reported to have been leased for above HK$400 psf, recapturing
the high prices recorded in 1997. ``This is the trend and both retailers and
investors should bet only on prime shopping cores.''
Smith also said he expected to see
sweeping changes in the Tsim Sha Tsui shopping district. ``Refurbishment of
Deck 2 of Ocean Terminal is going to be completed in October and work on
Deck 1 will start soon after. The entire refurbishment, including an
eye-catching Ferris wheel, is scheduled to finish in 2004.
``Together with the opening
of 1 Peking Road early in 2003, where all the ground floor shops have been
taken up by luxury brands, the Canton Road/Harbour City area is
strengthening its position as the high-end shopping node of Kowloon.''
- 2002 October