Mainland customers firstly reduced on May Day holiday; Owners hope can rent shops to brand tenants.
(By Su Hongqiang, Liang Yueqin)
Person-time of mainland customer to Hong Kong on May Day holiday (1st-3rd May)was 387,700, down 1.7% compare with 394,400 on last one ( 29th April to 1st May), and it also firstly reduced after free travel policy implemented in 2003, while retail was bad during the holiday, Immigration Department announced. Core area shop rent estimated to drop by 5%-8% in this year, mostly because free travel visitors slow down their consumption, leading commercial shops harder to be rent out, predicted by Midland Shops. Colliers International also pointed, non-occupation shops in hot tourism area increased, which shows the rent of core area shop has been to the peak.
The rising range of retail sales of jewelry and watch industry which stands for luxury products sales slows down since the middle of last year, with about HKD 75.4 billion registered in last September, only up 5.6% by year, according to statistics from this company. In this February, the sales of luxury products was about HKD 96 billion, down respectively 0.49% and 17.6% by year and month, which were not ideal.
Anti-corruption decreased luxury consumption.
In the past May Day holidays, Hong Kong retail sales gained large profit, but recently it is shocked by mainland anti-corruption which reduces some mainland customers' purchasing power and damps the gift giving ethos, expressed by Lu Zhanhao, the Executive Director of Midland Shops. He added, last year, mainland government shortened the May Day holiday into three days from seven days in the past, which largely decreases the time for mainland people going out. While under free travel policy, mainland visitors can come to Hong Kong at ordinary times; Plus with there were some conflicts between Hong Kong people and mainland visitors, so mainland visitors in Hong Kong slightly decreased.
At the same time, the running cost in recent years increased, while visitors and their purchasing power did not catch up, so the retail sales faces higher pressure. Under many factors, Hong Kong retail sales in this quarter may not have surprise result, and it is predicted to rise 7.9% by year in this May, with about HKD 43.8 billion being brought in. Retail sales will continue weak, plus with shops are harder to be rented out, so the rent of core area shops in this year may down by 5%-8%, and short term investors should pay attention to the market trend and be careful before purchasing.
Shop owners are not as aggressive as before being affected by recent slow retail sales, and this caused the falling of core area shop rent, but it still is within the normal range, pointed by Chen Guokun, the Senior District Sales Manager of Centaline Industry & Commercial Shops. He added, many shop owners are favor to powerful brand avoiding tenant is unable to renew a lease because of difficult business operation.
The retail sales of City Plaza firstly dropped in the first quarter.
In fact, we can know about Hong Kong retail sales according to operation data in first quarter announced by Swire Properties (1972) yesterday. Three malls of Swire Properties had different performance, Citygate Outlets among which specially attracts free travel visitors had sales grow in 7.5%, down comparing with 22.1% in same period of last year.
As for sales amount of Pacific Place, it was the same to of last year; While retail amount of City Plaza declined by 5.6%. Swire Properties expressed the retail sales amount of City Plaza was not adjusted after lost causing by suspension of business during the optimization decoration.
