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HONG KONG: British luxury brand Burberry plans to take over a major part of the space that speciality department store Lane Crawford currently occupies in Pacific Place in Admiralty.
Swire Properties, a wholly owned subsidiary of Swire Pacific which owns the mall, said Burberry had committed to take up about 21,000 sq ft over two storeys for its flagship store. It is expected to open in the second half of 2012.
"It will become the Burberry brand's biggest outlet in Hong Kong," a person with knowledge of the deal said. The store will carry a full range of fashion lines for men, women and children, and have a cafe.
It will be Burberry's flagship store for Asia and its second-biggest in the world.
Lane Crawford will close its Pacific Place branch when its lease expires in February 2012. It currently occupies about 50,000 sq ft in the mall.
"I believe that Burberry will target mainland shoppers," said another individual. "It is not the hottest brand among Hong Kong shoppers, but it is a darling of mainland Chinese."
Burberry prices have steadily increased and are now comparable to those of top-end luxury brands such as Chanel and Louis Vuitton, said an industry observer.
But Burberry still generated strong sales, especially across the region, and this has prompted the company to expand rapidly, she said. Burberry delivered strong results for the year ending March 31, with retail revenues up 36% and now representing 64% of total revenue.
Burberry opened seven stores this year in the region, of which five were in Hong Kong. The company has said it would emphasis flagship openings and refurbishments in high-profile locations, including Hong Kong.
Property consultants said international retailers and local jewellery brands have been competing for prized space in Hong Kong, pushing rents to new highs.
A watch and jewellery shop will replace Staccato, a shoe store, at a 1,000 sq ft spot at Melbourne Plaza in Central and will pay rent of HK$1.6 million (RM606,633.56) a month, according to Jeannette Chan, Jones Lang LaSalle's head of retail for Hong Kong and southern China. The landlord initially sought a rent of HK$1.2 million, but strong demand pushed up the price.
Retailers were willing to pay the steep rents because of robust sales and tourist spending, Chan said.
Retail sales grew at an annual 27.8% to HK$33.1 billion in May. In the first five months of the year, retail sales were up 23.6% year on year.
According to the Tourism Board, visitor arrivals in the first five months of the year increased 14.5% over the same period in 2010. The number of mainland arrivals rose 65.5%, while those coming under the individual visit scheme increased 32.6%.
Chan expected local consumer confidence to remain strong and tourist spending to remain a key driver for retail revenue growth. The stronger yuan was also likely to continue to support demand for luxury goods in the foreseeable future.
This positive outlook is likely to see retailers' rents continue to climb but at a slower pace throughout the second half of the year, according to Joe Lin, senior director of retail services for CB Richard Ellis (CBRE).
In one of the largest leasing transactions so far this year, clothing brand Abercrombie & Fitch leased several floors in the Pedder Building in Central for about HK$7 million a month.
The past few months have also seen luxury car dealers signing up for new retail spots. Rolls-Royce, Maybach, McLaren and Bugatti have all committed to establishing new shops on Hong Kong Island.
LVMH (Watch) will replace Great Shanghai Watches & Jewellery and rent a 600 sq ft shop in Russell Street, Causeway Bay, paying HK$1.5 million a month, and Taiwan's Eslite Bookstore will open a 50,000 sq ft store in Hysan Place, Causeway Bay.
But CBRE's Lin said a hidden threat to Hong Kong's retail property market might be Beijing's plan to cut the mainland's import tax on luxury goods — a move aimed at spurring domestic consumption and restoring trade imbalances, key objectives of the nation's five-year plan to 2015.
Such a cut would hurt retail sales in Hong Kong, he said. — SCMP
Home sales rebound runs out of steam
After a two-week uptick, secondary flat sales declined last week after the government announced its latest measures to cool the property market
HONG KONG: A rebound in the secondary market's home sales ran out of steam last week, on an absence of positive factors to entice more buyers to enter the market, according to real estate agency Ricacorp Properties.
Data on sales and purchase agreements compiled by Ricacorp from transactions in the 50 biggest private housing estates in Hong Kong show 179 deals were completed in the July 18-24 period, representing a decline of 8% from 195 sales the previous week.
"Property market sentiment had improved in the middle of this month, but there were insufficient positive factors last week, and therefore the sales rebound could not be sustained," said Ricacorp director David Chan.
The decline came after secondary flat sales climbed for two consecutive weeks from a near six-year low of just 146 sales three weeks ago. The low point in transaction volumes came after the government announced its latest round of measures, including mortgage loans restrictions, to cool the property market.
Flat sales on Hong Kong Island remained low with only 19 homes sold in nine housing estates during the July 18-24 period, down 17% from 23 transactions in the previous week. In most of these estates, including Kornhill and Nan Fung Sun Chuen in Quarry Bay and Grand Promenade in Sai Wan Ho, just one transaction was completed.
There were also fewer transactions in the New Territories, where 114 sales were recorded, down 16% from the previous week's 96 sales, the data showed. Sales on the Kowloon peninsula rebounded slightly from 58 to 64 deals.
"The market is weak, but it is becoming more stable," Chan noted. "Fewer flat owners are willing to cut prices while not many prospective buyers are willing to offer matching prices. And while this resistance remains, it is difficult for sales' volumes to keep surging."
However, in the 35 housing estates monitored by estate agency Midland Realty during the July 18-24 period, transactions were up 16.7%, from 108 to 126.
But despite that rebound, the sales volume was still 25% lower than it was before the government announced cooling measures, Midland Realty's chief analyst Buggle Lau Ka-fai said.
By contrast, the primary market improved significantly. A report by Samsung Securities analysts Lee Wee Liat and Patrick Wong Chi-leung said 142 primary flats were sold over the weekend, up significantly from 62 units sold the previous weekend.
About 92% of the transactions were from Sun Hung Kai Properties's Imperial Cullinan project in West Kowloon. "The strong sales at Imperial Cullinan may absorb some purchasing power of luxury units in the market," the analysts said. — SCMP
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