In Markets

Luxury retail out, food and beverages in as cheaper rents spark change in character to Hong Kong’s malls and streets

The character of Hong Kong streets and shopping malls is changing as more overseas food and beverage operators and retailers catering to local consumers move to the city to take advantage of sharp falls in rent, says Tom Gaffney, CBRE’s managing director for Hong Kong, Macau and Taiwan.

He expects retail rents would hit bottom in 2017 after a further 15 per cent decline this year. In 2015, overall retail rents fell by 20 per cent.

“The retail market is not completely dying, but rather undergoing a structural transformation from one that is highly driven by luxury consumption goods to one that is more relying on mid-market brands and products,” he said.

Besides mid-market brands in fast fashion, cosmetics and banking services, food and beverage operators have become more active, said Gaffney, who brought Jamie’s Italian restaurant chain to Hong Kong before he joined CBRE early this year.

Last year, about 37 food and beverage brands established in Hong Kong, while about 10 new brands have set up in the city so far this year, he said.

F&B contributed 40 per cent of revenue to CBRE’s Hong Kong retail business last year, up from 15 per cent in 2014.

One of CBRE’s leasing transactions was negotiating for Seafood Room, which is Bulldozer Group’s first restaurant in Asia, to secure the top floor of Tower 535 in Causeway Bay. Bulldozer is one of the biggest restaurant groups in Eastern Europe and the UAE.

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