Retail Research

December 2011

Hong Kong Retail

INSIGHT AND COMMENTARY ON THE WORLD’S MOST DYNAMIC RETAIL MARKET

December 2011 Hong Kong Retail Monthly

Figure 1 Slower growth in Retail rents and retail sales value Year-on-year % change 30% retail rents in 2012 25% 20%

15%

In the coming year, international retailers will continue to 10% expand into Hong Kong’s major shopping centres in 5% 0% non-core areas. Retail rents are expected to continue rising -5% in 2012, albeit at a slower pace amid the risks of a -10% worsening global economy. -15% -20% 1995 1997 1999 2001 2003 2005 2007 2009 2011

Headlines 8A–8C and 19–30D on the first floor of Retail rents Retail sales value Tropicana Gardens in Wong Tai Sin, Source: Census and Statistics Department / Rating and ’ (0016.HK) new Valuation Department / Knight Frank totaling 29,000 sq ft, were sold for HK$170 Note: three-month moving average of year-on-year growth shopping arcade V City, atop Tuen Mun million or HK$5,862 per sq ft. MTR Station, is scheduled to open in the Figure 2 first quarter of 2013. The 300,000-sq-ft Stanley Plaza in Stanley reopened in Visitor arrivals mall is expected to attract a daily November after a HK$230-million Year-on-year % change pedestrian flow of over 100,000 visitors on renovation by the Link Reit (0823.HK), 60% opening, of which 20–30% is expected to increasing its number of tenants from 27 50% to 45. It is the first mall in Hong Kong to comprise Mainland tourists. About 50% of 40% allow pets. shops in V City have been pre-leased, with 30% monthly rents ranging from HK$50 to Meanwhile, Sun Hung Kai Properties has 20% HK$280 per sq ft. Over 80% of the tenants started to renovate Grand Century Place in 10% will be establishing an outlet in Tuen Mun at an investment of about 0% for the first time. HK$400 million. The enhancement, -10% anticipated to be completed by the third Many retailers have expanded into Tuen -20% quarter of 2014, aims to increase customer Mun amid increasing Mainland visitor -30% spending in the district. H&M and Zara flow and spending by 10–12%. Jan 2009 Jul 2009 Jan 2010 Jul 2010 Jan 2011 Jul 2011 opened stores in tmtplaza earlier this year, Retail sales Mainland Non-Mainland while Emperor Watch & Jewellery (0887.HK) Source: Hong Kong Tourism Board / Knight Frank has pre-leased 4,000 sq ft of retail space Hong Kong’s retail sales value increased in the mall. for the 25th consecutive month in Figure 3 September 2011, rising 24.1% year on year Retail property prices and rents Apple (AAPL.US) has reportedly leased a to HK$31.2 billion. In the first nine months Jan 2007 = 100 15,000-sq-ft store in , of 2011, the total retail sales value grew 220 Tong, for a monthly rent of 25.4% compared with the same period in HK$3.75 million or HK$250 per sq ft. This 200 the previous year. follows the opening of their first Hong 180 Kong store in ifc mall and the pre-leasing Visitor arrivals of shops in , Causeway Bay 16 0 and Toy House, Tsim Sha Tsui. The firm The number of visitor arrivals to Hong 140 reportedly plans to open a 20,000-sq-ft Kong in October 2011 grew 16.4% year on store in Hysan Place in the third quarter of year, to reach 3.4 million. The number of 120 2012. Mainland visitors—comprising 67.0% of total arrivals—surged 24.9% to 2.5 million, 100 A number of major sales transactions while visitors from other parts of the world 80 worth over HK$100 million were recorded grew 2.3% to 1.3 million. 2007 2008 2009 2010 2011 last month. The Urban Renewal Authority bought a basket of retail properties in Yue Retail price index Retail rent index Man Square, Kwun Tong for HK$177 million, Source: Rating and Valuation Department / Knight Frank as part of its Kwun Tong Town Centre redevelopment project. Meanwhile, units

2 KnightFrank.com.hk

Table 1 Selected sales transactions in non-core areas

Over the past few months, a District Building Floor / unit Gross Price Price number of major retail sales floor area (HK$ (HK$ per transactions with prices over (sq ft) million) sq ft) HK$30,000 per sq ft were North Wah Lai Ground floor 270 $9.5 $35,185 recorded in non-core areas. Point Mansion / unit 8 Hung Hom Polly Court Ground floor 252 $7.868 $31,222 / unit 3 Yuen Long Tung Sing Ground floor 355 $9.6 $27,042 Building / unit E

Tai Kok Charming Ground floor 336 $8.35 $24,851 Tsui Garden Arcade / unit 56

Cheung Shun Lee Ground floor 1,035 $25 $24,155 Sha Wan Commercial / unit A Building

Source: Economic Property Research Centre Note: All transactions are subject to confirmation.

Table 2 Selected leasing transactions in non-core areas

Hang Seng Bank leased a District Building Floor / unit Saleable Monthly Monthly floor area Rent Rent (HK$ ground-floor unit in Yiu Po (sq ft) (HK$) per sq ft) Mansion, Tai Wai for HK$300,000 or HK$211.3 per sq Tsuen Wan City Landmark 2nd floor / 154 $54,625 $354.7 unit 37 ft. Kwun Tong Kin Tak House Ground floor 525 $123,000 $234.3 / unit L Kwun Tong On Ning Building Ground floor 460 $103,500 $225.0 / unit C

Tai Wai Yiu Po Mansion Ground floor 1,420 $300,000 $211.3 / unit 5

Yau Ma Tei Alhambra Ground floor 380 $80,000 $210.5 Building / unit 14

Source: Economic Property Research Centre Note: All transactions are subject to confirmation.

Table 3 Movement of prime-street shop rents in Nov 2011 (compared with Oct 2011) All major retail districts saw Central Causeway Bay Tsim Sha Tsui Mong Kok month-on-month rental growth

in November 2011. Rent movement

KnightFrank.com.hk 3

RESEARCH

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