The rise and rise of Canton Road
As Hong Kong became a magnet for shoppers on the luxury tourist trail, several areas transformed: Tsim Sha Tsui’s Canton Road being the most prominent example of this trend.
Once best known for hosting a myriad of hotels located next to the Star Ferry, the shopping mecca now boasts the city’s largest collection of luxury brands. Between the growing malls including Silvercord, 1881 Heritage, Harbour City, and Gateway, Canton Road offers just about every luxury brand the discerning shopper could wish for ranging from watches and jewellery to heels, bags and scarves.
Tsim Sha Tsui has always been known for its shopping, but Canton Road’s transition into a luxury hotspot began in the late 1990s as Wharf started to attract high-end tenants to its Harbour City complex which now has over 700 shops. At the time, the area was home to restaurants and bars, such as Sun Tung Lok and Hot Gossip, to name a few and those more entry-level local retail outlets.
However spotting a gap in the market Louis Vuitton expanded its floor space from 2000 to 10,000 sqft, and not to be outdone Gucci and Lane Crawford soon moved in. As the Hong Kong government began to permit Mainland Chinese visitors to make personal visits to Hong Kong in 2004, the luxury brands flooded in, with 1 Peking Road offering homes to Christian Dior, Zegna and Cartier. Other brands such as Burberry, Chanel, Hermes, Rolex and Blancpain had no option but to join the migration thus making Canton Road the chic place to shop.
The financial crisis that swept the world in 2008 didn’t seem to affect Canton Road’s ascension. In 2013, the South China Morning Post reported that jewellery and watch retailer Chow Tai Fook was paying an estimated HK$6 million a month for a 2300 square foot shop, a three time rise from the former tenant A/X Armani Exchange. Indeed, the opening of 1881 Heritage in 2009 saw the likes of Brequet, Cartier and Tiffany take up roots in this magnificent building and they were soon followed by Apple, Hugo Boss and D&G all opening up in the area.
The situation now…
The mood has certainly changed, as visitor numbers drop and Hong Kong residents feel the effects of increasing rents and rampant inflation. According to the Hong Kong Tourism Commission, the per capita spend from overnight visitors has progressively dropped from HK$7234 in 2015 to HK$6602 in 2016, and the Hong Kong Tourism Board is predicting a further 5.2 per cent decline in 2017.
Yet for whatever reason Canton Road has proved resilient to the trends – with 70 per cent of shoppers originating from Mainland China, it still boasts some of the highest rents yet best performances in the world. Although it is jam packed with luxury brands, the picture is not as clear-cut in so far as it only offers luxury products.
When you look at both sides of the road the mixed-use is visible. Whilst the Harbour City side comprises of 75 per cent luxury fashion and watches, the other 25 per cent is dedicated to local brands. The luxury stores, leased out by Wharf, are dominated by flagships with double- and even triple-storey facades, and have some of the most productive sales in the world.
On the other side of the street, a blend of different landlords sees local tenants taking up 29 per cent of shops, with cosmetics and other mid-price consumer-level goods well represented.
This mix ensures that Canton Road retains its crown as the premier destination for luxury goods in the city, akin to Bond Street in London, Rodeo Drive in Los Angeles, Via Monte Napoleone in Milan and Ginza in Tokyo. The success in attracting luxury goods fanatics has been driven by Wharf. Its strategy to drive high-end brands to Canton Road made Harbour City one of the best performing shopping centres anywhere in the world, with annual sales of approximately HK$28 billion.
With high-end consumer goods increasingly available around the world, in addition to the backlash to luxury spending in China, and wealthy Mainland Chinese tourists exploring other destinations aside from Hong Kong, a mixed-use environment may become more prominent in Canton Road.
Only time will tell what the next chapter is for this intriguing Hong Kong retail phenomenon.
Nick Bradstreet is head of leasing with Savills in Hong Kong. He has over 28 years of experience in the retail market across Hong Kong and Asia Pacific. Read more of his columns here.