Asia Minute: Hong Kong Luxury Goods Stores Want Cheaper Rents
Rents for retail space on the island of O‘ahu rose to a record earlier this year. Colliers International says commercial rents here have been rising for the past several years, a trend that’s expected to continue. Commercial rents have also risen in Hong Kong, but some luxury retailers are fighting back. HPR’s Bill Dorman has more in today’s Asia Minute.
Selling luxury goods in Hong Kong is not the business it used to be. Part of that reflects a slowing Chinese economy. But those who follow the sales say an even bigger impact has been the crackdown on extravagant spending by Chinese government officials.
This week, the chief financial officer of Gucci’s parent company threatened to close some stores in Hong Kong unless rents are reduced. He told a conference call of analysts that “many landlords have not necessarily understood that the markets have changed.”
Bloomberg reports Burberry may also try to lower its rent after its sales in the city fell to a two-year low. Commercial rents have come down in some parts of Hong Kong, but they remain among the most expensive in the world. Reuters reports a 500-square foot store space in the neighborhood of Causeway Bay can cost the equivalent of 64-thousand US dollars a month.
Commercial real estate firm Cushman and Wakefield says annual rent for retailers tops two-thousand dollars a square foot in three different Hong Kong neighborhoods. Many Chinese shoppers are now traveling beyond Hong Kong to buy luxury goods. In a report last month, Bain and Company said the world’s luxury goods market is continuing to grow, and its major driver is tourism.