Cosmetics retailer Colourmix will soon move to Hong Kong’s Russell Street, once the world’s most expensive shopping strip, and pay almost 40 percent less than the former tenant as China’s economic slowdown rattles the city.
“Landlords have to face the reality, no matter how reluctant they are,” Lawrence Wong, a director at property agent Sheraton Valuers Ltd., said in a telephone interview over the weekend. “It’s still better than leaving their property empty.”
Russell Street has lost its claim as the most expensive shopping street on the planet to New York’s Fifth Avenue, according to broker Cushman & Wakefield Inc. in November. A July research report by Jones Lang LaSalle Inc. predicted prices for space in prime locations will drop 15 percent to 20 percent in Hong Kong this year.
Retail rents were down 12 percent in Causeway Bay and 3 percent in Central at the end of June, Oriental Daily reported earlier this month, citing data from CBRE Group Inc. The broker said in a report that the decline came after rents for shops at prime locations in Hong Kong’s four shopping districts, including Tsim Sha Tsui and Mong Kok, increased by 213 percent from 2003 to 2014.
Hong Kong’s retail property market has slumped as China posts its weakest growth in a quarter century. The world’s second-largest economy will announce a growth objective of 6.5 percent to 7 percent for 2016, according to eight of 15 economists in a Bloomberg News survey conducted Sept. 17-22. All of those surveyed said they expect next year’s target will fall short of the about 7 percent set by Premier Li Keqiang for 2015 growth.
Colourmix, run by Veeko International Holdings Ltd., will rent a 1,000 square-foot space in Causeway Bay for almost HK$1 million ($129,000) per month, 43 percent lower than what luxury Swiss watch brand Jaeger-LeCoultre is currently paying, said Wong, whose company handled the transaction.
In Central, Hong Kong’s business district, Adidas Hong Kong Ltd. will pay 23 percent less for the space being vacated by Coach Hong Kong Ltd., according to Land Registry data. The sports brand’s rent is HKD4.34 million a month, down from HK$5.6 million paid by Coach, the designer handbag maker.
Hong Kong’s residential market also is experiencing weaker sentiment. “Housing market outlook will likely become more cautious amid increased volatility in the global and Hong Kong’s financial markets,” the Hong Kong Monetary Authority said in a report released Friday. “The risk of downward adjustment has picked up steadily.” Alfred Liu, Bloomberg
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