Hong Kong Retail

Retail Research January 2011 Hong Kong Retail INSIGHT AND COMMENTARY ON THE WORLD’S MOST DYNAMIC RETAIL MARKET January 2011 Hong Kong Retail Monthly Figure 1 Retail rents and retail sales value Strong retail Year-on-year % change 25% growth in 2010 20% 15% The retail property sales market experienced a 10% 5% robust year in 2010, with 7,112 transactions being 0% recorded in the first eleven month—an increase of -5% 76.4% year on year. Meanwhile, total consideration -10% -15% increased 50.0% to HK$72.3 billion. -20% 1995 1997 1999 2001 2003 2005 2007 2009 Headlines watch brand Rado for a monthly rent of Retail rents Retail sales value Hong Kong shopping malls achieved HK$640,000, representing a yield of 2.0%. Source: Census and Statistics Department / Rating and Valuation Department / Knight Frank impressive sales results over the Previous restrictions on non-Guangdong Note: three-month moving average of year-on-year growth Christmas period last year. Sun Hung Kai migrant workers in Shenzhen traveling to Properties (SHKP) announced that sales at Hong Kong have been relaxed since 15th Figure 2 its eight major shopping malls, from 24th December last year. Over four million such Visitor arrivals to 27th December, totaled about HK$175 workers can now apply for single-entry YoY change % million—up 34% from the same period in visas under the Individual Visit Scheme. 60% 2009. Meanwhile, MegaBox in Kowloon Each visa allows visitors to stay in Hong 50% Bay said its visitor numbers and total sales Kong for seven days per visit, four times a 4 0% increased 20% and 30% year on year, year. The travel industry expects to reap an 30% respectively. extra HK$5.6 billion a year, thanks to the 20% Knight Frank successfully introduced new policy. 10% PIAGO, a supermarket and homewares Meanwhile, SHKP is planning to organise 0% brand from Japanese retailer UNY, to Hong 200 shopping tours this year, inviting -10% Kong. The 70,000-sq-ft store is located on 9,000 corporate Mainland consumers to -20% the fourth and fifth floors of Telford Plaza its malls. The tours, organised by in Kowloon Bay—a space previously -30% registered Mainland travel agencies with Jan 2009 Jul 2009 Jan 2010 Jul 2010 occupied by Ikea—and is the first PIAGO SHKP providing transport and branch outside Japan. accommodation, are expected to reap Mainland Non-Mainland Vertu, a high-end mobile phone retailer, HK$56.4 million for the developers’ Source: Hong Kong Tourism Board / Knight Frank reportedly leased a 700-sq-ft retail space shopping malls. in Central Building in Central for a monthly Retail sales Figure 3 rent of HK$1.5 million or HK$2,143 per sq ft. Retail property prices and rentals This represents a new rent-high for the In November, Hong Kong’s retail sales Jan 2007 = 100 district, doubling the rent paid by the value increased for the 15th consecutive 170 previous tenant, shoe retailer Geox. With month, rising 17.9% year on year. In the spending levels of Mainland shoppers first 11 months of 2010, the retail sales 160 expected to continue growing, the market value grew 18.2% from the year before. 150 expects retail property rents to rise 140 another 20–30% this year. Visitor arrivals 130 Emperor International reportedly bought a The number of visitor arrivals to Hong 120 600-sq-ft shop at the junction of Russell Kong jumped 17.1% year on year in Street and Percival Street in Causeway Bay November. Visitors from the Mainland, 110 for HK$380 million, or HK$633,333 per sq comprising 61.5% of arrivals, remained 100 ft (based on gross floor area), breaking the dominant. The number of Mainland 90 previous record of HK$554,600 per sq ft visitors surged 21.6%, while the number of (based on gross floor area) set by 6-8 visitors from other parts of the world 80 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Canton Road in Tsim Sha Tsui 14 months increased 10.6%. ago. The shop is currently leased by a Retail price index Retail rental index Source: Rating and Valuation Department / Knight Frank 2 KnightFrank.com.hk Table 1 Selected sales transactions in core areas Mong Kok saw robust retail District Building Floor / unit Gross Price (HK$ Price (HK$ property sales activity, with a floor area million) per sq ft) (sq ft) number of prime-street shops being sold at high prices. Causeway 76 Percival G/F 600 $380 $633,333 Bay Street Mong Kok Sincere Plaza G/F / units 234 $62 $264,957 2–3 Mong Kok Sincere Plaza G/F / unit 12 93 $17.46 $187,742 Mong Kok Sincere Plaza G/F / unit 10 107 $16.46 $153,832 Mong Kok Argyle Centre G/F / unit 20 241 $34.3 $142,324 Source: Economic Property Research Centre Note: All transactions are subject to confirmation. Table 2 Selected leasing transactions in core areas A number of major leasing District Building Floor / Floor area Monthly Monthly transactions were recorded in unit (sq ft) Rent (HK$) Rent (HK$ Mong Kok and Tsim Sha Tsui. per sq ft) Mong Kok Tak Lee Commercial G/F / unit 139 (G) $130,000 $935.3 Building 1 Mong Kok Pakpolee G/F / unit 471 (G) $215,000 $456.5 Commercial Centre 2 Tsim Sha Star House G/F / unit 303 (S) $62,000 $204.6 Tsui 18A Tsim Sha Hermes Commercial G/F / unit 220 (S) $30,000 $136.4 Tsui Centre 1 Tsim Sha Wah Fai Mansion G/F / unit 3,636 (G) $430,000 $118.3 Tsui B Source: Economic Property Research Centre Note: All transactions are subject to confirmation. G = Gross floor area; S = Saleable floor area Table 3 Movement of prime-street shop rents in December 2010 (from November 2010) Shop rents in prime streets of Central Causeway Bay Tsim Sha Tsui Mong Kok core retail areas continued to edge up, except for Mong Kok, Rent movement where rents remained stable. KnightFrank.com.hk 3 RESEARCH Americas Hong Kong contacts Bermuda Brazil Alan Child Canada Executive Chairman Caribbean T: (+852) 2846 9522 Chile E: [email protected] USA Australasia Corporate Consultancy Australia New Zealand Paul Hart Executive Director T: (+852) 2846 9537 Europe E: [email protected] Belgium Czech Republic France Retail Services Germany Hungary Livian Har Ireland Director, Head of Retail Services Italy T: (+852) 2846 9543 Monaco E: [email protected] Poland Portugal Romania Research Russia Spain Pamela Tsui The Netherlands Research Manager UK T: (+852) 2846 4843 Ukraine E: [email protected] Africa Botswana Kenya Malawi Knight Frank Research provides strategic advice, consultancy services and forecasting Nigeria to a wide range of clients worldwide, including developers and investors, as well as South Africa Tanzania financial and corporate institutions. All recognise the need for the provision of expert Uganda independent advice, customised to their specific needs. 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