Hong Kong retail space may surge by record amount in 2023 as mall owners aim to catch returning tourists
- The amount of new space for shops could quadruple from just over a million square feet this year to about 4 million sq ft in 2023, according to Savills
- Retail landlords are trying to time the opening of their shopping malls to coincide with the return of tourists after the city’s borders reopen
With several large projects in the pipeline, the amount of new space for shops could quadruple from just over a million square feet this year to about 4 million square feet in 2023, according to Savills.
Smith said the dramatic increase in supply might lead to “some moderation” of rental growth in noncore areas in 2023.
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The largest supply of new retail space came in 2019, at over 2.3 million sq ft, which included the opening of the K11 Musea shopping centre in Tsim Sha Tsui, according to Savills.
The five-year average between 2017 and 2021 was 956,000 sq ft.
With a total investment of HK$32 billion (US$4.11 billion) behind it, Airside is set to open in the fourth quarter of 2022.
“Consumers are adaptive to the new normal [of living with the pandemic]. Retail business has been picking up since the second quarter of 2021,” said Billy Hui, executive director of Hong Kong property at Nan Fung Development.
With anti-pandemic measures including strict border control, the number of leisure visitors remained close to zero in 2021, according to the Hong Kong Tourism Board.
The city’s retail sales have been largely recovering since hitting a trough in early 2020 caused by the double whammy of social unrest and the initial outbreak of coronavirus.
“In recent years, we have been forming strong partnerships with tenants by introducing customised measures to support them whenever necessary,” said Hui. “Our resilient approach has led us to respond to the new normal flexibly.”
The retailers at Airside will span fashion, lifestyle, entertainment, kids and families, wellness and dining.
“We are keen to collaborate with our retailers to co-create a place that brings people back to nature and encourages interactive experiences,” Hui added. “Retailers are confident about the mix of residential development in the surrounding areas and the dynamic workforce in Kai Tak.”
Among the projects due next year is Sogo’s twin commercial blocks in Kai Tak, which will provide about 1.1 million sq ft of space mainly for retail, including a Sogo department store.
“There will theoretically be most of the brands you see in Causeway Bay. But as a new landmark, there will definitely be some things so far not seen in Hong Kong,” said Poon Fuk-chuen, company secretary at Sogo operator Lifestyle International Holdings.
The amount of rent charged to tenants may take its lead from Telford Plaza, Megabox in Kowloon Bay and the nearby Mikiki shopping centre, Poon added. “We will maintain Sogo’s original market positioning. We have been targeting purchasing power in the mid to mid-higher [range].”
Yuen Long’s Yoho Hub mall, with a floor area of nearly 110,000 square feet, is now entering the planning stage and is expected to open in 2023, said Jessica Wong, deputy general manager of leasing at Sun Hung Kai Real Estate Agency.
“After the project is completed, it will join with Yoho Mall to become the largest leisure and shopping district in the western and northern New Territories,” she said.
At present, Yoho Mall, the landlord’s existing shopping centre in Yuen Long, has more than 1.1 million square feet of floor space.
