Cosmetics retailer Colourmix will move to Hong Kong’s Russell Street, once the world’s most expensive shopping strip, and pay about 40 percent less than the former tenant as China’s economic slowdown rattles the territory.
“Landlords have to face the reality, no matter how reluctant they are,” Lawrence Wong (黃偉文), a director at property agent Sheraton Valuers Ltd (喜來登旺鋪代理), said in a telephone interview on Saturday. “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 last year.
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, the 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 last year.
Hong Kong’s retail property market has slumped with China facing its slowest growth in a quarter-century. The Hong Kong government is closely monitoring developments in the territory’s property market and will make policy changes if necessary, Financial Secretary John Tsang (曾俊華) told reporters yesterday.
Hong Kong’s prices are being affected by an increase in supply and volatile external factors such as a high probability that the US may raise interest rates, he said.
Colourmix, run by Veeko International Holdings Ltd (威高國際控股), will rent a 93m2 space in Causeway Bay for almost HK$1 million (US$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 HK$4.34 million a month, down from HK$5.6 million paid by Coach, the designer handbag maker.
Hong Kong’s residential market is also 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 on Friday. “The risk of downward adjustment has picked up steadily.”
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