Slowdown hits Hong Kong luxury retail rents
naky
www.diecastingpartsupplier.com
2015-10-14 16:52:51
Rents in what were the world’s most expensive shopping streets have dropped by as much as 40 per cent as the impact of China’s slowing economy on Hong Kong’s once-booming luxury goods industry deepens.
to Gucci-owner Kering, companies in the sector are calling on landlords to cut sky-high rents, raising the prospect that the rate of store closures will accelerate.
A shop previously occupied by Jaeger-LeCoultre
in Causeway Bay is being replaced by a local discount cosmetics retailer that has negotiated a lease about 40 per cent cheaper than the high-end Swiss watchmaker.
Elsewhere in the city, the world’s biggest market for Swiss watches and many other luxury goods, handbag maker Coach
has vacated a prime corner store in the business district that is being taken for less rent by Germany’s Adidas.
“There’s a grim macro background to what’s going on,” said Simon Smith, head of research for Savills, the property company, in Hong Kong. “The end result is that people are spending less on big-ticket discretionary items, with watches and jewellery hardest hit. But now it’s filtering down to luxury fashion and cosmetics.”
Annual sales of watches and jewellery — a key indicator for the wider luxury goods market — doubled in Hong Kong between 2010 and 2013, peaking at $15bn before going into reverse over the past two years. In the first eight months of this year, sales were down by 14 per cent on the same period a year earlier.
The corruption crackdown launched by President Xi Jinpingin 2012 made the purchase and display of expensive watches and designer accessories taboo among government officials and state-owned company executives who drove the growth of Hong Kong’s luxury shops.
The slowing Chinese economy has further dented demand for high-end goods in Hong Kong, while currency moves have made alternative shopping destinations such as Japan, South Korea and Europe more attractive to Chinese consumers who are travelling overseas in ever-greater numbers.