H&M to shut flagship store in downtown Hong Kong
H&M to shut flagship store in downtown Hong Kong
Swedish fashion retailer H&M has announced Friday that it is shutting its flagship store in central Hong Kong due to sky-high rents.
When the Swedish company opened its first store in China, in Hong Kong’s Central district in 2007, the mood was one of heady anticipation, the Wall Street Journalreported. Now, the company says the 30,000 sq.-foot store will close in fall 2013.
The new tenant Zara, a Spanish competitor also known for its similar mass clientele and quick inventory turnaround, had agreed to pay rent of $1.4 million a month, twice what H&M was paying, according to 163.com.
"Retail in Hong Kong is so fast and always expanding, so shops do close and then open up elsewhere. This is quite common in Hong Kong,'' H&M spokeswoman Cher Chui said,” With 12 shops in Hong Kong, sales in Asian financial center and China are doing very well.”
Hong Kong is home to the world’s highest retail rents, with rents jumping 19% since 2011 to reach an annual US$3,864 per square foot, said commercial real estate firm CBRE. Rents in Central grew 6% in the first quarter of this year alone, reported commercial real-estate brokerage Collier International.
The prestigious shopping hub of Central is prized as a retail space as much for its branding opportunities as for its sales, but soaring rents have seen a trend toward "decentralization'' to other areas, the Hong Kong Standard said.
A slew of foreign investment banks had been outbound, moving to less expensive neighboring areas with the similar reason.
Tourism is a major source of retail revenue in Hong Kong, driven by spending from mainland Chinese visitors. Limited new supply and strong retail sales in 2010 and 2011 saw retail rental growth of about 20 percent last year, exceeding the 2008 peak, according to Fitch ratings agency.
It said China's economic slowdowncould see rents moderate in 2012, while remaining in "positive territory'', the Agence France-Presse said.
The deceleration of China, the world’s second largest economy, had been rippling through Hong Kong as shoppers from mainland cut back on purchase of luxury goods such as jewelry and watches.