Retailers in Hong Kong Getting Enhanced to Get In to the Core of the Market

Approximately 65% of international and local retailers have plans to open new stores in Hong Kong in 2018. It shows retailers are calling the core of the retail market and predicting an improvement since the retail rents in core shopping districts have dropped 40% from the market peak in 2014. 

Half of the Hong Kong's retail market will recover next year. Although all retailers believe high-street rentals are still over-valued, Approximately 65% of them have expansion plans. There is an equal balance between retailers who prefer to open a new store in shopping malls and street-level shops.

Hong Kong is immensely important because it is a very strong domestic consumer market and because it offers exposure and access to the Mainland Chinese market.

Analysis has shown that arrivals from overnight tourists - who spend double on shopping than what same-day tourists spend has been risen by 6%.

Tourist numbers are bouncing back. Hong Kong's rentals have come down and still need a small amount of correction to create equilibrium. However, business is booming for many retailers and the reduced rentals have left a great opportunity to get prime retail space. As our survey suggests, retailers are seeing this as a great time to take advantage of the market conditions and acquire more space,

Online shopping in Hong Kong is less popular than in other cities. But 72% of respondents believe Hong Kong consumers will embrace it in the next 5 years, with 22% of retailers believing they won't.

 The experience that online platforms offer is currently rather poor in Hong Kong and so far it is still more convenient and more enjoyable to just pop into a mall. "However, this will change. You are starting to see malls future-proof themselves by focusing on creating the mall as a community hub whether that's through more entertainment such as improved cinemas or increased variety and quality of restaurants. For bricks-and-mortar shopping to continue to succeed, the experience you get from a mall needs to be better than what online platforms can offer.

Landlords are now willing to offer flexible leasing terms to the retailers if the image of the brand is good. The rental correction has created opportunities for more retailers to enter the market, and for landlords to diversify their tenant mix. It has also helped many retailers to open crossover stores to create a new shopping experience.