Hong Kong luxury retail market finally set to recover

Some luxury brands such as Louis Vuitton are gradually returning into the city.

Owing to weak spending by locals and Chinese mainland visitors, Knight Frank says several supermarket operators closed in Hong Kong. According to market sources, grocery chain Dah Chong Hong (DCH) ceased operations at its 28 DCH foods retail stores, and supermarket chain U Select has closed dozens of money-losing branches. 

Japanese discount store Don Don Donki is to seek restructuring of its operations as earnings declined due to overexpansion in a weak market. 

Here’s more from Knight Frank:

On a positive note, we witnessed some active expansion by Chinese F&B operators. Notably, a 2,095-sqft ground-floor unit in Whampoa Garden Phase 1 in Hung Hom was leased to Xiao Noodles for HK$200,000 per month (HK$96 per sq ft). 

Hong Kong’s luxury retail market is also set to regain some lost ground as some high-end brands gradually find their way back into the city. For instance, Louis Vuitton, a French luxury fashion house, will return to Times Square in Causeway Bay after a three-year break. The company is reported to have leased a duplex shop in the mall for more than five years, which reflects a bullish stance on the city that has not been seen in years. 

Also, Beijing-based Laopu Gold, a specialised brand of handmade gold with traditional Chinese craftsmanship will open a flagship store in Silvercord on Canton Road, Tsim Sha Tsui, the former location of Burberry’s flagship store. 

Looking ahead, retail sales in Q2 are expected to remain soft, as weak local consumption persists. Shop rentals in core retail areas are expected to remain under pressure in the short term, as the absorption rate is still slow, given the cautious attitude of retailers and F&B operators towards expansion plans.