As the retail luster of Hong Kong dissipates, luxury fashion retail brands LVMH and Prada are dropping their leases. At the same time, prime retail rents fell late last year as social unrest impact commerce and discouraged many of the Mainland China visitors who back luxury demand from visiting, The Wall Street Journal reported.
Brokers indicated per the report that La Perla and Prada SpA both intend to leave Russell Street this year, and Prada is not forecast to renew a lease that concludes in the summer. Brokers also say luxury retailer Louis Vuitton plans to shutter its Times Square Mall location following the landlord’s refusal to reduce rents.
Chow Tai Fook Jewelry Group, a local jewelry heavyweight, plans to shutter as many as 15 stores in desirable tourist areas, with the inclusion of Mong Kok, Tsim Sha Tsui and Causeway Bay in the financial year starting April. The firm foresees paying 30 to 50 percent less for leases in Hong Kong renewed in the latter part of the current financial year.
Brokers Cushman & Wakefield said that as recently as the second quarter of last year, Russell Street was the priciest shopping street around the globe. On average, tenants paid an annual $2,745 a square foot to secure retail space in that location.
The financial center’s retail sales experienced a double-digit drop in November, with visitor arrivals dramatically falling per a report earlier this month. By value, retail sales retreated 23.6 percent in the month from the prior year, but the fall in November was a bit better than the record contraction in October as well as the predictions of economists.
Larger and smaller merchants alike are among those impacted by the continuing protests in the city. And Mainland China arrivals are said to make up the lion’s share of all Hong Kong visitors and fell 58 percent in November.