Hong Kong’s Swire Properties says sales at its flagship The Mall, Pacific Place fell six per cent last year, as protests and changing mainland Chinese tourist patterns took their toll.
Swire’s Hong Kong retail portfolio – which also includes Cityplaza in Taikoo Shing and Citygate Outlets at Tung Chung, achieved a gross rental income increase of three per cent to HK$2,705 million in 2014, largely due to positive rental reversions. The group’s malls were all effectively fully let throughout the year.
But Swire said retail sales at Pacific Place fell, reflecting weaker spending by tourists from mainland China and in the last quarter, the effects of Occupy Central. Retail sales at Cityplaza were stable despite incidental disruption and shop closures during implementation of an enhancement project. Retail sales at Citygate Outlets were 4.6 per cent higher in 2014.
At Pacific Place, which turned 25 last year, the only empty tenancies during the year were the result of tenant changes. Chanel and Prada expanded their shops in the first quarter of the year. Canali, Goyard, Sandro and The Continental and Kokomi restaurants became tenants during the year.
Cityplaza, which Swire describes as one of the most popular regional shopping centres in Hong Kong and which is the largest shopping centre on Hong Kong Island, was the subject of a HK$100 million refurbishment.
Sales remained stable despite incidental disruption and shop closures during the work. Over 30 new retail brands were introduced including Zaar, i.t., Log-On and Francfranc. The property was virtually fully occupied during 2014 and Swire says it intends to continue to diversify the tenant mix at the centre.
The increased sales at Citygate Outlets (of which Swire owns 20 per cent) reflected its location near tourist attractions and transport links thus drawing both tourists and local shoppers.
“Foot traffic was strong in 2014. Demand from retailers for space and to introduce new brands to the centre is strong,” Swire said in its earnings statement.
The property developer says demand for luxury goods in Hong Kong has weakened, but it expects overall retail sales in Hong Kong to “grow modestly” in 2015.
“Demand for retail space at prime locations and well-managed shopping malls is expected to remain high.”
Swire’s complete retail portfolio in Hong Kong comprises 2.8 million sqft of space. Total attributable gross rental income from its retail properties in Hong Kong was HK$2.798 billion in 2014. As of December 31, its Hong Kong retail properties were valued at HK$53.99 billion.
