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   << DOUBLE CLICK ARTICLE

After a successful run in Hong Kong, H&M is closing its flagship store on Queens Road in Central.   Zara is taking over the space at $1.4 million USD a month   >>  MORE

Forever 21 is paying $14 mln HKD per month   >>  MORE

 

 
2011 December

The Hong Kong Advantage

Hong Kong has the advantage of NO luxury tax so for luxury goods, items are cheaper in Hong Kong than in China.

"50 percent of handbags and 75 percent of watches sold in Hong Kong" were bought by those from over the border. A mainlander staying overnight spends 73 percent of their money on shopping"

  
 Creative by Ben Oliver

China's tariffs run as high as 45 percent for cosmetics and 43 percent for high-end watches, driving many rich consumers to shop in Hong Kong, London and Overseas, a trend that the Chinese commerce ministry wants to change, according to media reports.   Meanwhile though its affecting Hong Kong Retail rents and rents in Causeway Bay exceed $1,510 (USD) per square foot.  --  2011 December

The rush to court Mainlanders

Shoppers who spend at least HK$5,000 at the Causeway Bay complex (above photo) during Lunar New Years were offered two tickets to Ocean Park.   

On average, mainland shoppers spend between HK$15,000 and HK$20,000 per person, with more than half spent on watches and jewellery.

Landlords compete to attract mainland visitors and SHKP spend HK$13.5 million on Lunar Promotions targeted to the mainland market.   -- 2011 January 26     >>  ARTICLE  SOUTH CHINA MORNING POST

Luxury brands boost IFC Mall rental rates
Ten restaurants lose out as SHKP secures higher-paying jewellery and fashion tenants

The 450,000 sq. ft. of lettable area in upscale IFC Mall commands rent of HK$250 to HK$300 per sq. ft. per month    --  2011  February 23                >>  ARTICLE  SOUTH CHINA MORNING POST

Causeway Bay rents set to rise with new mega mall
Strong pre-leasing at new Causeway Bay retail  - Hysan Place

Hong Kong's Causeway Bay, home to the world's third-most expensive shopping strip, is set for its biggest facelift in almost two decades with a new mall that may drive up rents in the area.

Upmarket: Prime street shop rents on Russell Street have increased 34% in Q1 compared with a year earlier

Hysan Development Co, the area's biggest commercial landlord, next year will complete a complex the size of 12 American football fields in the district's biggest addition since 1994, when Wharf Holdings Ltd's Times Square put the area on the luxury retail map.

About 45 per cent of Hysan Place's retail space is already filled with tenants that may include Apple Inc.

'2011 will probably be the year of Causeway Bay,' Nick Bradstreet, Hong Kong-based head of leasing at Savills Plc, said in an interview.

'Hysan Place will bring huge interest to the area. Rentals on a lot of the neighbouring streets are going to come up because of that.'

Increased spending by cashed-up Chinese tourists and the addition of new shopping space will drive up prime street shop rents in some parts of Causeway Bay, a former fishing village, by as much as 50 per cent this year, according to Jones Lang LaSalle Inc, the world's second-biggest commercial brokerage.

Causeway Bay's Russell Street has the world's third-most expensive retail space after Manhattan's Fifth Avenue and Avenue des Champs-Elysees in Paris, according to Colliers International.

Hysan, which owns about three million square feet of office and retail space in the area east of the Central district, is scheduled to complete construction of the 710,000-square- foot Hysan Place in the second quarter of 2012.

Average rents at prime street retail shops in Causeway Bay rose to HK$910 (S$146) per square foot in Q1 from HK$833 in Q4 2010, according to Savills.

'Rental in this area probably won't go back to what you'd consider reasonable in a conventional sense for a while,' Hysan chief executive officer Gerry Yim said in an interview.

'Retail rents reflect shops' turnover and from what we see, businesses in Causeway Bay are going to stay robust for a long time.'

Hysan is also completing the renovation of 26,000 square feet of ground floor retail space at the 34-year-old nearby Leighton Centre.

'The benefit of these renovations they're carrying out right now will begin to show down the years,' said Eva Lee, a Hong Kong- based property analyst at Macquarie Securities Ltd, who recommends investors to buy the company's shares.

'With the tight supply of both office and retail space, the opening of Hysan Place is exceptional timing.'

Hong Kong's biggest commercial landlords have outperformed residential developers in the past year. Hysan's shares have risen 72 per cent since the beginning of 2010 while Wharf has added 24 per cent.

By contrast, Sun Hung Kai Properties Ltd and Cheung Kong (Holdings) Ltd, the city's two-biggest residential developers, have risen 2.2 per cent and 15 per cent respectively.

Hysan shares rose 1.2 per cent to HK$37.95 at the 4pm market close here, compared to a 0.8 per cent advance in the Hang Seng Property Index, which tracks the performance of the city's seven biggest developers and doesn't include Hysan.

Causeway Bay, a fishing village in the city's early colonial days, is now a bustling hub where fishball and juice sellers, mobile phone shops, luxury watch retailers, and local-designer brands are squeezed next to shopping malls that house European luxury brands such as Gucci and Louis Vuitton, and Japanese clothing and accessory chains including Muji and Uniqlo. Times Square overlooks a meat, vegetable, and fruit market.

'Hysan Place will attract a slightly different crowd to the area' compared to Times Square and other malls owned by Hysan, said Helen Mak, Hong Kong- based head of retail at Colliers.

'It's catering more to the younger generation, whereas many of the outlets selling luxury goods in the district are aimed at mainland Chinese tourists.'

Chinese tourists visiting Hong Kong jumped 26 per cent to 22.7 million in 2010 from a year earlier, according to the city's tourism board. The figure reached a daily record of 122,893 on April 30 this year, according to the organisation.

Prime street shop rents on Russell Street have increased 34 per cent in Q1 compared with a year earlier, according to Savills, the UK's largest publicly traded property broker.

Retail sales at tenants in Times Square rose 25 per cent in 2010 on increased arrivals and spending by Chinese visitors, according to figures from Wharf.

Retail rents in Tsim Sha Tsui, a shopping and commercial district on Hong Kong's Kowloon Peninsula, last year climbed as much as 25 per cent after the opening of three new shopping malls including New World Development Co's K-11 and Chinese Estates Holdings Ltd's The One.

Hysan Place may have the same impact on shop rents in Causeway Bay, starting with its nearby streets, according to Savills, Colliers, and Jones Lang.

Causeway Bay is about a seven-minute subway ride from Central. Hysan in 2010 derived 43 per cent of its gross profit from office rental and 41 per cent from its 900,000 square feet of retail space, according to its annual report.

'Shops without a very high turnover will be gone in the long run,' said Hysan's Mr Yim from the company's office on the 49th floor of the Lee Gardens Building, which overlooks the area.

'Recently a fruit-seller closed down and chances are that these kinds of retailers won't be back. The whole area is going through another transformation.'  -- 2011 May 19  Bloomberg

Luxury brands to force local retailers out of prime sites

A sensible pair of shoes or basic household items may become increasingly hard to find in Hong Kong's prime retail districts as wall-to-wall luxury brands force out local retailers.

Property consultants say home-grown retailers are being driven out of Hong Kong's prime shopping districts by big- and mid-range luxury brands which are rapidly building up their presences in the city.

Lured to Hong Kong by the acceleration in local retail sales and the growing number of wealthy mainland China shoppers who visit the city, overseas and larger domestic retailers are bidding aggressively for prime locations within which to expand their retail footprint.

Since new supply is limited, less competitive players are being forced to move to suburban shopping centres where rents are lower.

With their business network and financial ability, big global brands usually outbid local players, said Joe Lin, senior director of retail services for CB Richard Ellis (CBRE). 

The result is already visible in the shift in the retail mix in Hong Kong's leading shopping malls and shopping precincts toward international luxury brand retailers.

"So local retailers will disappear from prime shopping districts and they will be forced to move to sub-districts," Lin said.

Given the city's cosmopolitan image as well as product reliability, Hong Kong has long been attractive to luxury brand retailers. 

That can be shown in the property consultant's newly released survey.

Hong Kong has maintained its position as the most popular destination for luxury retailers, with 84% of the luxury brands covered in the 2011 edition of CBRE's "How Global is the Business of Retail?" present in the city.

CBRE's annual survey now in its fourth year mapped the global footprint of 323 of the world's top retailers across more than 200 cities to identify trends in global retail expansion at national and local levels. Hong Kong has ranked number one in the past four years in terms of having the highest percentage of global brands present in the city.

"Hong Kong's ranking reflects the continuing love affair that local residents and increasingly visitors from mainland China have with luxury fashion," said Nick Axford, head of Asia-Pacific research for CBRE.

Hong Kong's retail sales have been driven higher by the improving domestic environment and the robust economic growth in China. More than 22 million China tourists visited Hong Kong last year, accounting for 63% of the total number of visitor arrivals.

Apart from luxury brands, there is a new wave of mid-ranged international brands coming to Hong Kong, a new source of pressure to drive local players out of the prime shopping areas.

"Rental is not their major concern. Because of the Hong Kong currency, international brands are willing to pay the rising rents in Hong Kong. It is limited space that is the issue," Lin said.

Lin recently introduced some mid-ranged global brands to landlords of Hong Kong's major shopping arcades. 

But even though the clients were interested in having a local presence, they could not find space at the time.

When will home-grown retailers be totally extinguished from prime shopping precincts?

Helen Mak Hoi-lun, director of retail services at Colliers International, said there was no easy answer to that question.

"But the trend is under way. We have seen some home-grown fashion retailers such as G2000 facing mounting competition from international brands such as Zara and H&M," Mak said.

"I recently brought one international retailer to visit the major shopping malls. They were curious to know why most of the shops were global brands," she said.

Other examples of local retailers being forced out of prime shopping areas include US-based fast fashion retailer FOREVER 21 taking up space formerly occupied by local brand Giordano in Capitol Centre in Causeway Bay, and German luxury goods brand MCM taking over space previously occupied in Entertainment Building by another local clothing brand, Episode.

But some home-retailers that offer iconic cultural merchandise, such as Kee Wah Bakery that sells traditional bakery products such as mooncakes and bridal pastries, may be more difficult to dislodge from their premises, Mak said.

Both Lin and Mak believe that the trend will nonetheless continue in the wake of the continued growing retail sales and rising mainland shoppers.
    2011 April 19   SCMP


--2011 March 31

The jump in retail sales has driven up prices of prime retail

Second floor shops in Mongkok, a secondary retail location are going to market for sale at up to $132,000 per sq. ft.      --  2011 March 9         >>  ARTICLE SOUTH CHINA MORNING POST

ARCHIVED  ARTICLES 

Shop sale fetches record price in Hong Kong

A company run by Hong Kong's best-known entertainment mogul has paid a record 108 million US dollars for a shop in one of the busiest shopping districts. 

The sale of the 1,212 square foot outlet comes as the city's government tries to contain soaring property costs due to fears they are getting out of control. The price works out to about 90,000 dollars per square foot, making it the city's most expensive retail space, the South China Morning Post reported, quoting an unnamed source.   "It is unknown if this is now the most expensive shop in the world, but obviously it's a record in the city," real estate agent Lawrence Wong told the daily newspaper. 

The shop in Hong Kong's busy Tsim Sha Tsui district houses luxury retailer Emperor Watch & Jewellery, which is run by music tycoon Albert Yeung, the Post said.   Yeung's Emperor Entertainment Group has contracts with a host of Cantonese pop stars who claim legions of fans in the city of seven million. An Emperor subsidiary, which had been leasing the space, bought the property because of "the investment value of the location and a basic need for the shop," the source told the paper. The previous record for a Hong Kong retail space was set in May by Yeung's brother Ricky, who paid 58,000 dollars US per square foot for a shop in the same neighbourhood, the Post said.   - 2009 December 22   

Dominant HK retailers abusing their positions

A study that shows Hong Kong retailers are abusing their dominance has reignited calls for a competition law.

In the study, the Chinese University of Hong Kong (CUHK) polled more than 120 suppliers and found that almost a third are barred by retailers from working with their competitors.

Of the suppliers surveyed, 32.2 per cent said they have been forced to accept a retailer exclusively, while 38 per cent are made to restrict goods they supply to other retailers.

Suppliers are also forced to share promotion fees, cut their prices and bear responsibility for damaged goods.

The suppliers surveyed come from the food & beverage, cosmetics, household products and pharmaceutical sectors, and provide goods for supermarkets and drug stores - two retail industries dominated by just a handful of players.

'Supermarkets in Hong Kong seem to have very large powers to dominate the market and also force the suppliers to do something they want,' said Sin Yat-ming of the university's marketing department and one of the authors of the report. Hong Kong needs a competition law to level the playing field, he said. 'To me, this (survey) is a signal - we have some hard evidence there exist some unfair practices in the retail industry. There's definitely some unfair competitive advantages.'

The government has been urged for decades to introduce a competition law, amid anecdotal evidence of flagrantly unfair behaviour in the retail industry.

French supermarket chain Carrefour pulled out of Hong Kong in the late 1990s after four years of losses in a market dominated by two large players. Carrefour complained that it was not given prime locations and gave details of companies which, it claimed, pressured it into not cutting prices.

Pressure on suppliers was also suspected as one of the reasons that publishing magnate Jimmy Lai pulled out of the retail market in 2000. His Internet retailer Admart triggered a fierce price war, but ceased operations as profits took a nosedive.

'The phenomenon (of anti-competitive practice) has been discussed within the industry,' said Prof Sin. 'But people always keep saying it's a particular case. It seems not many suppliers are willing to stand up and speak out.'

The size of a supplier does not seem to make any difference. The study found that big companies supplying retailers are subject to even more restrictions and demands than smaller players.

Hong Kong is a city dominated by a handful of powerful players - in the power and property industries, for example. Consumer groups have long called for legislative measures to outlaw any abuse of their position.

A consultation exercise on the topic was completed last year but it is unclear whether the government intends to proceed with a territory-wide competition law or go for a sector-specific approach.

'At least we would have a system, some kind of mechanism, in case there are any abusive practices,' Prof Sin said. A law would also have a potent deterrent effect, he said. 'But right now, we don't have such a system so all these retailers can say is that they have not violated the law.' - by Jane Moir   SINGAPORE BUSINESS TIMES    2007 March 20

Landlords ride the retail boom

Hong Kong's overheated retail leasing market cooled in the fourth quarter of last year as many store owners adopted a wait-and-see approach after the recent spate of rental hikes.

Hong Kong's overheated retail leasing market cooled in the fourth quarter of last year as many store owners adopted a wait-and-see approach after the recent spate of rental hikes.

However, rapid rent increases for prime high street outlets in Causeway Bay, Mong Kok and Tsim Sha Tsui have benefited more affordable, second- tier streets in these districts, as some store owners have moved to more affordable premises nearby to minimize costs.

Overall, retail rents edged up by 2.9 percent in the fourth quarter of 2005, with Central recording the largest rise at 4.5 percent. Mong Kok registered a mild increase of 2.2 percent, following its significant rise in the third quarter.

Buoyed by continued upbeat consumer sentiment and record numbers of tourists, total retail sales were provisionally estimated at HK$15.8 billion in November, up 4.2 percent from a year ago.

After taking into account the effect of price changes over the previous 12 months , retail sales rose by 3.6 percent year on year. While sales overall grew at a steady pace, alcohol and tobacco registered the largest boost, jumping by 10.6 percent, followed by sales of Chinese drugs, herbs and fuels.

According to the Census and Statistics Department, improving economic conditions and record employment are helping to lift the average household income in Hong Kong.

These factors are feeding through to higher levels of consumer confidence, more so than in recent years, despite the interest rate hike cycle. Private consumption expenditure grew by 4.6 percent in real terms in the third quarter of 2005 over a year earlier.

The retail industry is expected to remain strong in 2006, supported by a high level of consumer confidence in the economy and optimism about an end to the interest rate hike cycle.

Despite the seasonal slowdown in the retail leasing market, restaurant owners have opened new outlets in major shopping districts.

In Causeway Bay, the renowned South Beauty Restaurant took up about 17,210 square feet in Lee Theatre Plaza for its first outlet in Hong Kong. Nanxiang Steamed Bun Restaurant, meanwhile, leased about 4,000 sq ft in Causeway Bay Plaza 1.

Elsewhere, high-end retailing was also evident as Chanel reopened its store in Prince's Building in Central with an expanded take-up of 6,500 sq ft over three floors. The revamped outlet is slated as the boutique's Hong Kong flagship.

Also within the review period, Louis Vuitton launched a 10,000 sq ft flagship store at The Landmark.

This is the luxury brand's fourth global flagship outlet after openings in Paris, Tokyo and New York. The facelift for the new boutique includes a contemporary, large-scale glass facade, a popular feature in recent Central upgrades.

At Admiralty, the 50,000 sq ft Lane Crawford store reopened in Pacific Place after months of renovation.

The new outlet has strengthened the department store's position as a top-end retailer with a new look for its upgraded interior while also offering a broadened trade mix.

Due to Hong Kong's booming retail market in 2005, many shopping center landlords began revamping their stores in order to maximize rental income. For instance, in the basement of Silvercord in Tsim Sha Tsui, the landlord has successfully sub-divided the ex-Muji space into 77 shops, with a gross floor area of about 14,000 sq ft, targeted at young, trendy retailers.

The revamped retail space is being referred to as vim@silvercord, with average shop sizes ranging between 200 sq ft and 300 sq ft at monthly rents of HK$150-$200 psf.

It's expected that vim@silvercord will enhance Silvercord as a shopping center for the young and trendy, as the ambience created by the revamped basement will bring in more teenager merchandise.

While vim@silvercord has the advantage of attracting more shoppers by providing more diverse merchandise for the landlord, the substantial rent increase is the best news.

According to the landlord, most of the shops were committed and opened before last Christmas.

Aside from vim@silvercord, the same landlord also plans to sub-divide the basement of Windsor House in Causeway Bay in the fourth quarter of this year.  - Andrew Ness is executive director, CBRE Research, Asia.      THE STANDARD    24 March 2006 

Lane Crawford plans $100m flagship

Lane Crawford International is responding to incursions on its home turf by the likes of famed retailer Harvey Nichols with an aggressive and high-profile expansion in  Central.

The upmarket department store operator will invest $100 million in a new, 80,000 square foot flagship store at the IFC Mall in Central, according to a source familiar with the company's plans.

"It will be Lane Crawford's largest investment in the region since the Asian financial crisis in 1997," the source said.

Venerable Lane Crawford, established 153 years ago, continues to be frequented by Hong Kong's rich and famous. It was privatised by Wheelock & Co in 1999. Last year, it was sold to a family trust linked to Wheelock chairman Peter Woo Kwong-ching.

Under the helm of Mr Woo's daughter, Jennifer Woo, Lane Crawford's IFC Mall outlet will be its largest. It is conceived as an "international fashion centre" concept store that will offer more than 1,000 designer labels. It is understood the retailer's current flagship store and city landmark, Lane Crawford House on Queen's Road Central, will close.

"[Lane Crawford's new store] will be totally different from its four existing ones," the source said. "Lane Crawford will bring the new concept to China with Beijing as its next target." Lane Crawford also has an outlet in Shanghai, and franchised operations in Hangzhou and Harbin.

According to the source, Lane Crawford's new flagship will occupy one floor and will be linked by a corridor to the new Four Seasons hotel, where a VIP zone earmarked for fashion shows and other functions will be created. The 1,000-room, six-star Four Seasons is scheduled to open next year at the IFC complex.

These and other details will be officially announced next month, with an opening scheduled for later this year. A Lane Crawford spokesperson declined comment, saying only that the company's plans had not been finalised.

Last year, rival luxury retailer Dickson Concepts (International) announced a $100 million investment to launch a 60,000 sq ft Harvey Nichols store at The Landmark, also in Central.

Colliers International research director Simon Lo said the aggressive expansion plans of luxury retailers such as Lane Crawford reflected their strong confidence the retail market.

"Luxury retailers are willing to spend a fortune for their new flagship stores to prepare for a rebound in the market," Mr Lo said, adding a growing number of international retailers are looking for flagship premises in prime locations.

In addition to bringing Harvey Nichols to The Landmark next year, Dickson Concepts is also opening a $50 million Seibu department store and a Dickson Watch and Jewellery shop this year at Langham Place in Mongkok.

Lane Crawford's investment comes as Hong Kong's 68-month descent into deflation appears to be ending, and the continued influx of mainland tourists breathes new life into the retail sector.

Retail sales are growing at 19.7 per cent year on year.   -by Sandi Li  SOUTH CHINA MORNING POST     26 July 2004

Retail stocks story an easy buy

Retail stocks have been among Hong Kong's best performers this year, and there may be more good news up ahead for them as the economy continues to rebound and mainland tourists keep flooding in.

One of them is Sa Sa International, the main board-listed cosmetics retailer that sells two of every five bottles of perfume in Hong Kong.

The company lost money a few years ago but made a dramatic turnaround when it recently reported a 121 per cent surge in profits for the year ended March.

Its share price has risen 39 per cent so far this year, against a 3.5 per cent fall in the Hang Seng Index.

The company derived 60 per cent of its revenue from local consumers when it listed in 1997, and mainland consumers accounted for almost none of the rest.

Seven years later, mainlanders were responsible for 35 cents of every dollar of sales last month.

``We also witnessed healthy growth in our shops at non-tourist areas,'' said chief financial officer and executive director Guy Look.

``That is a very encouraging sign ... that even local consumers are spending more.''

The consumption-dependent Hong Kong economy has enjoyed double-digit retail sales growth in recent months and registered the highest monthly growth rate since 1992 when it posted a 23 per cent year-on-year gain in April.

Not surprisingly, many listed retailers saw profits shoot upwards as well, tripling in some cases.

``We continue to like the sector but will need to focus on valuations,'' said Flavia Cheong, fund manager at Aberdeen Asset Management in Singapore, who pointed out the strong balance sheets of many local retailers.

``The valuations are reasonable at current levels.''

Retailers hit bottom during the Sars outbreak last year as consumers cut spending and tourists vanished.

The gloom began to lift when Beijing eased restrictions on mainland tourists last July, prompting hordes of free-spending tourists to flood into the territory.

According to Kingston Lee, Hong Kong and China research head at ING Financial Markets, some 1.7 million tourists visited Hong Kong in May alone, four times the number who came last year, and 27 per cent more than May 2002.

Overall, the number of mainland visitors grew 79 per cent from May two years ago.

After years of rapid growth, plenty of mainlanders have money to spend.

And they are attracted to goods sold here - even if they are produced on the mainland - because Hong Kong products have a reputation for quality and authenticity.

``It's a credibility issue,'' said Vincent Chow, director and group general manager of Chow Sang Sang Holdings International, which generates more than 50 per cent of its revenue from mainland tourists at shops located in areas such as Tsim Sha Tsui and Causeway Bay. ``They [mainland tourists] know what they get is genuine, an important factor for high-value items.''

Chow reckons the average mainland tourist spends about HK$3,500 at their shops, though some market sources said six-digit transactions are not uncommon these days.

``Mainland tourists provide a major force,'' said Sophia Lee, analyst at Oriental Patron Securities.

``Hong Kong consumers are also becoming more confident of the economy.''

BNP Paribas Peregrine regional consumer analyst Mohan Singh said the decline in unemployment, fewer personal bankruptcies and fewer homeowners whose flats are worth less than their mortgages have also helped boost spending.

The bilateral Closer Economic Partnership Arrangement (Cepa) also helped to inject confidence in the economy.

``This in turn helped boost consumption desire in general and that contributed a lot to our outstanding performance in Hong Kong,'' said Kathy Chan, director of finance and executive director of casual wear retailer Bossini International, whose latest results showed a reversal of fortunes, from a HK$78 million loss to a HK$118 million profit last year.

Mohan Singh noted that retailers last year brought forward their summer sales because of Sars.

This year, the sales were delayed until last month, helping boost retailers' margins.

``There was no pressure to rush [the sales] as retail sentiment has rebounded,'' Mohan Singh said, adding that operating margins also improved as retailers have kept tighter controls on costs.

Chan of Bossini said a change from a sales-driven strategy to a profit-driven strategy has also paid off.

``It led to various cost-control measures, including restructuring of our sales network, mainly [through the] closure of non-profit making outlets, reduction in advertising expenses and more stringent inventory and margin management,'' she said.

Building a strong brand franchise also helps retailers bring in customers.

All said, there are still challenges ahead.

``There will be some pricing pressure going forward if rental costs increase,'' Aberdeen's Cheong said.

Mohan Singh said rental pressure will be a concern for Hong Kong retailers this year. However, retailers will continue to prosper so long as sales increases outpace rent rises.

With the end of close to a six-year deflationary spell on the cards, wage cost pressures will also start to emerge as the economy recovers. Analysts expect retailers will start passing the increased costs on to consumers.

``We have only slight adjustments in prices and there should be some room,'' said Bossini's Chan, who also expects the cost increases to be more than offset by the increases in revenue as the economy continues to improve.

Many retailers have also expanded or begun expanding into the mainland.

Chow Sang Sang, which now runs 34 stores on the mainland and will have 43 by the end of the year, is going on an aggressive expansion plan.

``We plan to add one new shop in China every month,'' Vincent Chow said. ``We will have close to 100 shops in China in five years.''

Given all this optimism, it is no surprise retail stocks remain in favour among fund managers.

``Corporate profitability, as measured by return on equity, still looks attractive,'' said Ginie Lam, head of investment communications at fund manager Invesco Asia.

``In much of Asia, with some notable exceptions, we have not seen pricing power being destroyed by over investment.''

``As long as Asia maintains its corporate profitability at or around present levels,'' Lam said, ``it will continue to look attractive in a global context.''   - by Vanson Soon   THE STANDARD   27 July 2004

Retail rents succumb to sluggish economy    

Shop rents in prime retail areas fell an average 4.2 per cent in the third quarter amid the sluggish economic conditions, according to CB Richard Ellis.

Rents in Tsim Sha Tsui fell 4.8 per cent, those in Mongkok 5.9 per cent and Causeway Bay 5 per cent, the property consultant said. Central bucked the trend with a 1.2 per cent rise.

Retail rents were expected to fall further during the rest of the year despite stable leasing activity in the near term.

However, some retailers, including fast food restaurants and cosmetic outlets, were seeking retail space in prime areas to prepare for the traditional peak season of Christmas and New Year.

Competition within the retail industry had intensified in the face of the slow market conditions. Many landlords had embarked on major renovations in order to attract potential customers and the consultant expected to see landlords more prepared to negotiate on rents.

The amount of vacant retail space would rise following the closure of bank branches in some prime areas by the end of the year, the consultant said.  -  South China Morning Post    October 25, 2001

Price plunge pumps-up flats sales

Property transactions picked up significantly last month to the highest volume in eight months, as developers sought to boost the market with a series of price discounts at key projects.

Deals registered with the Land Registry last month rose 87.6 per cent to 9,723 compared with October, according to government data.

However, the value of transactions increased just 18.3 per cent to HK$16.8 billion, reflecting the fact that most properties were sold at low prices, analysts said.

The volume increase represented a recovery from the exceptionally poor market in October, which was hit hard by the September 11 attacks, but it was doubtful whether the strong sales record would continue in view of the economic downturn.

The transaction volume in October was 5,183, the worst recorded since February.

Property agents said last month's pick-up was driven by strong new home sales as developers cut prices to attract buyers.

Midland Realty estimated private residential transactions jumped 321.4 per cent during the month to 3,548 but secondary market deals rose only 22.8 per cent to 4,534.

Centaline Property estimated the new private home sales of less than HK$20 million amounted to 3,626, the highest for 30 months.

Properties offered for sale during the period were mainly smaller flats of HK$1 million to HK$3 million each, Centaline said.

These included Cheung Kong's Caribbean Coast in Tung Chung; Villa by the Park in Yuen Long, developed by Sun Hung Kai Properties; New World's Sereno Verde in Yuen Long and Horizon Place in Kwai Chung, developed by Sino Land.

Centaline said last month's pick-up was the result of various incentive schemes offered by developers and low interest rates.

But some analysts expressed reservations whether such an increase could be sustained in the first quarter next year following growing job insecurity and the global economic downturn.

"We still can't see the upside of the property market because of the oversupply of flats," Dao Heng Securities property analyst Eric Yuen said.

He said the increase in transactions should not be taken too seriously as a signal of recovery in the property market, saying many of the primary transactions were less than HK$2 million.

Mr Yuen said falling interest rates emerged as the main driving force for the increase in transactions.

"Many developers released their new developments after October with low prices and attractive mortgage-subsidy plans," Mr Yuen said.

"There's no surprise that the property market has become more active since then."

ABN Amro property analyst Anton Kwang expects the residential market to remain soft, saying despite Sun Hung Kai Properties' high-profile plan of raising prices by between 3 and 5 per cent, medium-sized developers were slashing prices to move inventory. He believes Sun Hung Kai Properties will throw in new incentives after lifting "face price" so the net selling price is unchanged.  - by  Richard Woo and Doris Chan      South China Morning Post       December 4, 2001

 


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