Luxury retailer Hermes is set to exit its Galleria flagship in further evidence of a shakeup in the city’s high end retail precincts.
Hermes Hong Kong operator Hermes Asia Pacific has told the South China Morning Post the company has signed a contract with Hongkong Land to relocate its flagship into Prince’s Building.
The newspaper reports the brand is likely to replace three existing tenants – Ralph Lauren, Alfred Dunhill and Brooks Brothers, which united take up about 10,000 sqft. But the building is also home to Chanel, Cartier, Van Cleef & Arpels, amongst others, and Ralph Lauren has recently invested a substantial amount in renovating its flagship store.
Based on discussions with local property sources, the paper predicts Hermes will sell its existing 7500 sqft Galleria store for which it paid HK$190 million in 2002. It is now worth as much as $1.5 billion, offering a substantial $1.3 billion profit for the European-headquartered retailer.
The existing tenants of the Prince’s Building are on leases with up to two years remaining, however given the current fluency of the retail leasing market, due to the slump in the luxury retail sales, most leases are currently renegotiable.
Hermes described the Hongkong Land signing as “a significant investment which proves Hermes’ confidence in the local retail market”.
Michael Chik, MD of Sheraton Valuers, said a sale of the Galleria building would serve as a benchmark for the property market, because it would be the first ground-floor retail premises in the luxury retail precinct put up for sale in nearly a decade.