Magazines Archives - 2008 September

Growing demand, tourist arrivals buoy up retail sector in Chinese markets
Story 2 - Focus

THE retail-space sector is doing well in Chinese markets, buoyed by the expanding local economy, growing local consumer demand and rising number of visitor arrivals, studies from propertyservices company Colliers International have shown.

In its July 2008 market overview of Hong Kong, Colliers noted the territory’s continual increase in retail sales and lease rates. The special administrative region is also seeing a strong demand for retail space, the study added.

Retail sales in Hong Kong for the first four months of this year amounted to HK$93.82 billion (US$12.014billion), up by 17.8% from the same period in 2007.

“The growth in sales continued to be underpinned by demand for bigticket items. Over the same period, the sales value of jewellery, watches and valuable gifts achieved a growth of 25.8% year on year, followed by the sale of motor vehicles, which increased 29.6%,” Colliers reported, adding that fashion retailers also saw a year-on-year sales growth of 16.5%.

The company noted as well that the expansion in tourist traffic, coupled with strong consumer demand, offset the global economic slowdown and the sustained volatility in the stock markets.

Visitor arrivals in Hong Kong rose 9.5% to 12.04 million in the January-May 2008 period, with those from China making up 55% of all arrivals.

Meanwhile, investor demand for retail space continued to be strong in the period of study, with the groundand basement-floor space of the Bank of America Tower in Central, Hong Kong, marketed at HK$540 million, or averaging HK$7,417 psf.

Rental rates in the traditional shopping districts of Mong Kok, Tsim Sha Tsui, Causeway Bay and Central alsowent up by 2.7% in the second quarter, as international brands continue to expand in the territory to gain a foothold in greater China.

“Over the next 12 months, the local retail market is expected to stay on its upward trend, given the solid fundamentals, including prospective economic growth, rising household income and positive employment conditions. As usual, the steadily rising number of inbound visitors and tourism receipts are expected to [further contribute] to the value of total retail sales going forward,” the report added.

In Shanghai, a rapidly-rising income and consumption sales supported the retail real-estate market in the first half, Colliers said, adding that international brands and fashion retailers’ demand for space lent support to lease rates, with ground-floor rental rates seeing a 4.5% hike for the period.

Some 202,600sqm of retail space is expected to come on stream in remaining half-year with the opening of shopping centres in the Pudong and Putuo districts, the company projected.

It expects the average ground-floor rental at shopping centres to be about 7%-8% higher in the second half of 2008 than in the first half, reflecting a 10% year-on-year growth. “Due to the stable investment environment in mainland China, [the] Chinese market is turning [out] to be the favourite of international investors,” Colliers added.

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