Can Singapore learn a lesson from a recent trend in Hong Kong retail?
Buffeted by shrinking tourist arrivals from the mainland, falling rent and changing demographics, retail landlords are looking to attract food retailers and restaurants in place of fashion stores. That’s because tourists are demanding more of a cultural and dining experience than an expensive shopping spree.
Real estate company Savills’ new Retail Leasing Briefing shows that rents in tourist districts eased 5 per cent in the first quarter, compounded by a 9 per cent drop in overall overnight inbound tourists in January and February. For overnight Chinese visitors, the numbers tumbled by 16 per cent.
This follows a hard year in which prime high street-shop rents took a 30 per cent dive, and overall overnight inbound tourist numbers fell 4 per cent, including a 6 per cent drop in those from Mainland China.
Market consensus is that the outlook for shops in prime streets will stay gloomy in the short term, says the report. However, rents should soon reach more sustainable levels.
With mainland tourists now mainly from second- and third-tier cities, the shopping focus is more on affordable luxury than high-end brands.
In shopping malls, landlords are adjusting their tenant mix to appeal to a broader segment of consumers. Savills says there will be a thinning of luxury offerings, to be replaced by more affordable and “intriguing” retailers, including outlets that need less floor space, like food and beverage offerings such as gelato and ice cream.
While there has been a loss of Chinese visitors, there have been about 14 per cent more tourists from short-haul markets such as Japan, South Korea, Taiwan and Thailand. They are often more interested in Hong Kong’s flavours and culture, and are less likely to shop for luxury items, says the report.