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Singaporean retailers seize opportunity from lower rents, spending revival to launch Hong Kong operations

HONG KONG — A clutch of Singaporean retailers are set to launch operations in Hong Kong, taking advantage of rents which have tumbled by as much as 80 per cent from their peak and a revival in local consumption amid an economic rebound.

Pedestrians at the popular shopping district of Causeway Bay in Hong Kong on November 1, 2018,

Pedestrians at the popular shopping district of Causeway Bay in Hong Kong on November 1, 2018,

HONG KONG — A clutch of Singaporean retailers are set to launch operations in Hong Kong, taking advantage of rents which have tumbled by as much as 80 per cent from their peak and a revival in local consumption amid an economic rebound.

Executives of these retailers, ranging from food and drinks operators to fashion brands and even those engaged in entertainment and education, are expect to travel to Hong Kong, to get a first-hand look at the situation here once the “travel bubble” between the two cities starts from May 26.

“We are in advanced talks with four to five retailers and expect some to sign the deals during their visit here,” said Mr Oliver Tong, head of retail at JLL in Hong Kong. 

One coffee chain plans to open more than 20 outlets in Hong Kong, Mr Tong said, without disclosing the name of the retailer, adding that some of them eventually plan to tap the Greater Bay Area after establishing a presence here.

Mr Tong said discussions with these retailers have been going on for months through virtual conferences, who plan to open stores ranging between 1,000 to 5,000 sq ft, in Central and Causeway Bay, mainly targeting local consumers.

“We have presented them studies of consumer spending ability and traffic patterns in locations they are interested in. Even if they cannot fly here, they already know the properties on offer for leasing,” he said.

The timing of Singaporean retailers looking to set up in Hong Kong could not have been better. Rents in the main shopping districts of Central and Causeway Bay have fallen by nearly 80 per cent from their peak in 2013, according to Savills. 

Hong Kong’s economy also seems to have turned a corner, with a 7.8 per cent growth in the first quarter, while retail spending is gradually picking up, with the value of spending rising 7.5 per cent in the first three months of the year.

Apart from overseas retailers, local food and drinks operators are also taking advantage of the low rents to expand, particularly in areas with increasing population, such as Tseung Kwan O, Tsuen Wan and Tung Chung as these areas have seen an influx of new supply homes over the past few year.

Savills last month said that about half of the 65 retail leasing deals done by the property agency since last year were in these three areas.

“A tenant-favourable market has drawn food and beverage operators setting up their first shop or expanding their presence in neighbourhood areas,” said Mr Barrie Chan, senior director of retail leasing of Savills. 

“We expect F&B operators to remain on the lookout for leasing opportunities over the near term against an increased possibility of further easing of existing social distancing measures.”

That is evident from the increase in restaurant licences issued last year, which rose 4.6 per cent to 25,329, according to the Food & Environmental Hygiene Department.

Among the new entrants is Mr Derek To Chik-lun. The 35-year-old entrepreneur is preparing to open a dim sum restaurant DHYC in Monterey Place shopping centre, Tseung Kwan O, in July.

“The rent in Hong Kong is much lower compared to two years ago,” Mr To said, adding that he was spoilt for choice when it came to deciding on a location to opening a new restaurants. 

“It is also easier to recruit good chefs and management in the current market environment,” he added.

To said he managed to bag the lease for about HK$100,000 (S$17,069) per month for the 2,600 sq ft space, nearly 25 per cent lower than the HK$130,000 before the pandemic.

“Many shopping malls previously would not accept new restaurant start-ups like us, but the pandemic has given me the opportunity to make it count,” he said. SOUTH CHINA MORNING POST

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Hong Kong rent retail travel bubble

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