s’ head of Asia Pacific retail, told Inside Retail. “Hong Kong is one of these core markets.” Dubbed ‘Tomorrow’s Central’, the 10 multi-storey brand maisons will be built in Hongkong Land’s existing interconnected commercial buildings in the heart of Hong Kong’s Central District – Landmark Atrium, Landmark Alexandra, Landmark Chater and Landmark Prince’s.  The three-year Landmark upgrade project includes more than US$400 million of investment capital from the firm and an estimated US$600 million from retail tenants. Peculiar timing  The investment announcement comes at a time when Hong Kong’s luxury sector is stalling as Chinese customers tighten their belts while Hong Kong shoppers are spending more outside the territory.  Harvey Nichols said in a press release last month that the retail market in Hong Kong is expected to be extremely difficult in the current financial year as local consumers have been travelling and spending abroad aggressively in markets such as Japan and Europe, which offer cheaper retail prices on luxury foods due to weak currencies and tax rebates to tourists.  “There is a caution in the market,” Bradstreet said. “China is underperforming. For all the known reasons, the economy isn’t doing well. People are saving more money than before, affecting all brands.”  He also noted that similar or the same merchandise can be found in brand stores in China as in Hong Kong. Moreover, Hong Kong is no longer as inexpensive as it used to be and there’s also some competition with Sanya and Macau. Therefore, it’s going to take some time for Hong Kong to truly bounce back. However, he stated that sales in Hong Kong are still relatively healthy. “Generally speaking, Hong Kong is doing okay, but it’s not back to the levels we saw before 2019. We’re not seeing the growth in China that we used to. This is the issue, and it’s affecting not only Hong Kong but also Southeast Asia, as mainland Chinese are not travelling to the same extent as they were,” Bradstreet said. “From a retailer’s perspective, retail brands prefer to optimise their existing locations rather than acquiring new stores. They’re identifying the best ones and expanding them. This is precisely what’s happening with Hongkong Land.” As Bradsteet noted, Hong Kong’s other major luxury shopping centres, Harbour City and Lee Gardens, have also repositioned and expanded their offerings since Covid-19. “And now it’s Central’s turn with Hongkong Land,” he said. “Historically, luxury has done extremely well in Central,. As the result, retail brands want to optimise their store size,” he said. “Landlords have to stay ahead of the game, they have to keep ahead of the competition. Otherwise, they stand to lose the brands they want. Luxury brands are focusing much more on VIC’s and Hong Kong Land is responding to this by creating more space for them, which is fantastic. A win win situation.” Strategic bet  Hongkong Land’s investment indicates the company’s and its luxury retail tenants’ strong confidence in the revitalisation of the city’s luxury sector.  “The focus now is on the Very Important Customer,” Bradstreet added.  “Traditionally, Central has catered to high-net-worth local customers. However, as they expand, they will also attract high-net-worth tourists. These tourists are likely to be guests at luxury accommodations like the Four Seasons or the Mandarin. So, while Central has been more locally focused and Tsim Sha Tsui more tourist-based, both will be placing an emphasis on VICs. This applies to locals in Central with this Hongkong Land property, but they will also be targeting high-net-worth tourists.” Hongkong Land said its VIC group has continued to spend more, with an average of HK$1 million (US$128,080) each last year. VICs contributed around 80 per cent of the company’s luxury retail sales in the region. “We are seeing a lot more Mainland companies and individuals coming down from the Mainland,” said Bradstreet. “These wealthy individuals are gaining residency in Hong Kong and they would be the customers for luxury. We are seeing the VIC customer base widen.” “This collaboration with strategic tenants will shape the future of Central for many years to come,” said Alvin Kong, executive director of Hongkong Land. “The considerable investments Hongkong Land and its strategic partners are making are not only a powerful endorsement of Central’s enduring role as the city’s iconic business and lifestyle hub but also demonstrate our shared, unwavering confidence in Hong Kong’s future as a global financial centre,” said Michael Smith, CEO of Hongkong Land.  According to the Mainland China and Hong Kong Luxury Market report by PwC, Hong Kong personal luxury market’s compound annual growth rate (CAGR) is estimated to reach 4.5 per cent from 2023 to 2030, reaching HK$125.8 billion by 2030. “Luxury groups should target VICs and the next generation of (ultra-) high-net-worth individuals as their core customers, fulfilling their wish for next-level services, luxurious lifestyle, wellbeing, art and culture,” said Michael Cheng, PwC Asia Pacific, Mainland China and Hong Kong consumer markets leader.