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The debrief: Hong Kong’s prospects as a luxury hub

Hong Kong has been in the limelight as of late – and for some in the luxury and retail industries, the positive press is overdue.

Captivating discerning shoppers from around the world, the special administrative region of less than 7.5 million residents has long been an alluring hub for retail and entertainment, a premier destination for high-end brands that wanted to establish a presence in Asia-Pacific – ideally close to mainland China.

SEE ALSO: A tale of two cities: Hong Kong, Singapore ‘evenly matched’ as Asia Pacific business hubs, says CBRE

Social unrest in 2018, followed by some of the world’s most restrictive Covid policies, delivered questions about Hong Kong’s safety and future prospects as a business centre, and prompted what has been seen by many as an exodus to nearby Singapore and other countries. But according to recent surveys such as a 2023 CBRE report, Hong Kong and Singapore remain “evenly matched” in the bid to attract both talent and multinational corporations’ regional headquarters in Asia Pacific.

And for luxury players, now that Hong Kong has unsealed its borders, it has become – again – an exciting place to do business, as evidenced by Louis Vuitton’s November fashion show on the Avenue of the Stars, and Dior’s decision to also bring its fashion show to the city in the first quarter of 2024. The Regent Hong Kong reopened this year, reportedly hosting Louis Vuitton creative director Pharrell Williams in its presidential suite.

Source: Art Basel Hong Kong

Art Basel, the world’s premier art fair, announced its Hong Kong edition would return to “full scale” in 2024, featuring some 242 international galleries that look to capitalise on the city’s big spenders, not to mention the throngs of collectors who travel to Hong Kong for the fair annually. “As the key strategic cultural hub in Asia and Asia Pacific, the city plays an important role, more than ever, in bridging the evolving art landscape across regions,” said Angelle Siyang-Le, director of Art Basel Hong Kong.

Francis Belin, president of Christie’s Asia Pacific, echoes the sentiment, citing robust buying momentum in Christie’s luxury categories from the recent Autumn Auctions in Hong Kong – its highest ever annual total for luxury in Asia, exceeding HKD2 billion across sales of wine, handbags, watches and jewellery.

“Hong Kong has always been a major hub for art and luxury in the region,” says Belin. Christie’s is preparing to relocate into its new, 50,000-square-foot Asia Pacific headquarters at the Zaha Hadid-designed The Henderson when it opens in 2024, a move Belin calls “pivotal” for his company.  “This underscores our commitment to staying at the forefront of the art and luxury market in the region,” Belin says. The new building by Henderson Land will also house tenants such as watchmaker Audemars Piguet, and private equity firm Carlyle Group.

Source: Christie’s Asia

Angelica Leung, head of consumer goods at InvestHK, which works toward attracting foreign investment to the city, shares the organisation continually receives enquiries from brands around the world looking to explore business opportunities in Hong Kong, whether in physical retail or e-commerce. Key to the sustained attraction to Hong Kong, she says, are its “business-friendly policies” and well-managed retail locations and districts. “In addition to the hardware, Hong Kong is a free port with fast customs clearance and zero import or export duties on luxury goods,” Leung says. “Hong Kong is an ideal location for brands to locate their regional headquarters and business functions such as financial management, digital marketing and to use the city as a logistics and distribution hub to serve the Asia Pacific region.”

The all-new The Regent Hong Kong, which reopened in November after extensive renovation. Source: The Regent Hong Kong

Hong Kong’s hospitality industry, heavily impacted by political protests as well as the pandemic in recent years, also still counts staunch believers.

Says Aron Harilela, chairman and CEO of the Harilela Group of Companies, which owns properties including The Hari Hong Kong, “I’m entirely convinced that Hong Kong will regain its lustre that it had lost during the pandemic,” he says, while acknowledging the growing range of options in mainland China and the Greater Bay Area.

“But people come to Hong Kong for the best quality watches, food, and fashion. And that will always remain here.”

At The Hari Hong Kong. Source: The Hari

Hong Kong boasts two of the World’s Top 50 Hotels, the Rosewood and The Upper House. While travel to the city is largely on an upward trend, Hong Kong’s retail and residential rental rates have yet to see a significant post-Covid hike, which, according to  Elisa Harca, CEO of Red Ant Asia, presents an opportune moment for businesses to secure prime locations at favourable terms.

“Landlords are increasingly receptive to innovative concepts,” adds Harca, who believes Hong Kong’s “streamlined financial system” has fostered a conducive environment for businesses to flourish. 

Dominique Backhouse, founder of PR firm Companion Communications, said her agency’s travel and property portfolio took a backseat as Hong Kong’s borders remained closed, but that she had seen RFPs triple since September 2023 from brands looking to re-enter Hong Kong and those planning to enter for the first time. “Brands are looking for Hong Kong money to visit their hotels and to invest in their residences – but more than this, I think brands are also keen to ride on Hongkongers’ influence in the Asian market,” Backhouse notes. “We’ve been in a downturn for a while, but we never lost our position as tastemakers in the region. We reject the narrative that we are still struggling – you have got to remember that Hong Kong has been built on pure grit and a commerce-first approach, and we are no different today.”

The Hong Kong skyline. Source: Shutterstock

SEE ALSO: What businesses need to know about Hong Kong’s changing retail landscape

Harilela adds: “I think Hong Kong in terms of the hotel industry is a very sophisticated market because we are unique in the world to have had such a mixture of different cultures to create levels of luxury and service that are next level. You look at the brands that have been exported from Hong Kong – The Peninsula Group, Shangri-La, Mandarin Oriental, The Langham, The Hari – I have to say that, obviously – and there is a reason that they are the best in the world,” Harilela says. 

“We have the best five percent of people in the world in every industry, and that’s why people will come back to Hong Kong to interact with that best five percent of the entire world. And this is why Hong Kong will always be a beacon of luxury, of sophistication and of travel.”