Hongkong's Retail Sector Is Still Full Of Uncertainty.

The recovery of Hongkong's retail industry is still difficult and full of uncertainty, as mainland tourists purchase in Hongkong.

The landmark of shopping in Harbour City is facing enormous pressure. There is an analysis that Harbour City's rent will drop 23% in the next 5 years, which is expected to be 30% higher than before. Obviously, Hongkong will have a big decline.

The continued downturn in retail sales is dragging down the performance of 00004.HK in Harbour City.

According to the latest UBS report, the rent of Kowloon warehouse shops needs to be lowered. Due to the reduced consumption of mainland tourists, it is believed that the economic contribution to Hongkong can hardly be restored to its previous level. The other high-end shopping mall Times Square will also be reduced by 15% in the next 5 years.

Like Harbour City, Times Square is the cash cow of the listed group.

According to the bank, to cope with the changes in the consumer mix, it is also necessary to adjust the tenant portfolio, including high-end luxury brands and jewellery, to more restaurants and entertainment.

Take the Kowloon warehouse Harbour City as an example, the average rentals of the catering businesses are about 10% and 17% of the jewelry or leather goods merchants. Even if the change of the merchant combination does not affect the occupancy rate, the profits will also be damaged.

Deng Juming, chief executive officer and chief executive officer of the jewellery retailer, who previously ran luxury stores, said frankly that Hongkong's retail industry, like SARS, is not labor pains. It has no prospect. Now the number of mainland tourists has dropped sharply, and the rent of the core area has dropped by 30% to 40%.

Harbour City is located in Tsim Sha Tsui, Kowloon, Hongkong. There are about 700 retail stores and the largest number of mainland tourists.

Harbour City's retail sales in 2015 dropped by 12%, the first drop in ten years.

According to the annual performance of Kowloon warehouse last year, the core profit of the group rose 25% to 13 billion 754 million yuan, of which 64% came from investment property and 28% from development property.

The core earnings of investment properties increased by 6% to 8 billion 800 million yuan. The group's rise was due to the high rental rate and the ideal growth of rentals.

Last year, the total investment revenue of Hongkong's investment property reached 12 billion 939 million yuan, up 6% from the same period last year, and its operating profit rose 7% to 11 billion 288 million yuan.

According to the project, the retail sales of tenants in Harbour City dropped by about 10% last year, but the total revenue increased by 5% to 8 billion 960 million yuan, operating profit increased by 5% to 7 billion 847 million yuan, and the revenue of shopping malls increased from 4% to 6 billion 207 million yuan. However, due to the withdrawal of Hongkong by Leone hall due to the adjustment strategy, the rental rate dropped to 96%; the income of Tongluowan time square increased 6% to 2 billion 838 million yuan, and the operating profit increased to 8% yuan.

It is noteworthy that in the first quarter of this year, the retail sales of group Harbour City and times square were recorded at a slightly younger growth rate than that of the big market. According to the early information provided by businesses, the performance was good. But Wu Tianhai, chairman of the Kowloon warehouse, said frankly that the retail sales in Hong Kong could not be immediately predicted. It would take months to see whether the darkest days had passed. The group pointed out that the overall number of people in the market has increased. Most of the tenants' rent is based on the dividend mechanism, so the business performance of the business is better than that of the group, which is favorable for group rental income. The first is that the retail sales in the first quarter of April will be better.

A market analysis indicates that the recovery of non luxury goods is better than that of luxury goods. Wu Tianhai points out that according to the data of the two major shopping malls, luxury goods merchants perform better, while non luxury merchants are dragging down the overall growth, but he stresses that they can not reflect the overall situation of Hongkong.

According to the analysis of the retail industry in Hongkong, the number of tourists from mainland China to Hongkong has dropped sharply, which has led to a heavy blow to retailers in Hongkong. The reason is that these retailers originally built their businesses around the huge demand of mainland tourists, but now there have been drastic changes.

Hongkong's retail industry is still in the doldrums, and luxury goods are the first to bear the brunt. In March this year, the French luxury goods giant LVMH (LVMH.PA), the main brand LOUIS VUITTON (hereinafter referred to as LV), rarely reduced the area of shops in Harbour City, which is the main shop in the mainland for free travellers to buy LV handbags in recent years.

According to the latest news, LV has decided to give up the rental of 770 square meters of 3 square meters of Harbour City port market, which has been closed.

The original rental 2 floor also reduced the rental of 222 square meters, the location has been implemented by the leather brand MCM stationed.

After the renovation of the shop, the shop area has been cut by 20%.

Since the end of 2015, luxury brands such as Prada, Burberry, Chanel and other rare brands have rarely sold half off promotions in Hongkong shops. This is the largest discount since the opening of the mainland tourists' free visa in 2003. This highlights the declining trend of Hongkong's fashion retailing industry. Even Hermes can't sit still and no longer hold the so-called VIP sale in private. For the first time in 2016, it faced the public's sale of 50 percent off goods.

According to the world clothing and shoe net, Hongkong's retail industry has declined for 23 consecutive months as of January this year. According to the main categories of retailers, the sales value of jewellery, watches and clocks and precious gifts declined by 3.9% in January, and the value of clothing sales dropped by 5.2%.

Some industry analysts believe that although the number of tourists in Hongkong has increased, their average consumption in Hong Kong has declined. The past luxury buyers in mainland China will not come back again, and the total retail sales value of Hongkong can not recover more than 10% growth in the past.

In fact, the Hongkong market has become the most serious disaster area for luxury goods groups.

According to statistics released by the Hongkong Statistical Bureau, the total retail sales in Hongkong in May were estimated at 35 billion 900 million yuan, an annual increase of 0.5%, an increase of 0.4 percentage points over April, a 3 consecutive month increase.

However, a spokesman for the Hongkong government also said that the three months' data alone can not prove that Hongkong's retail industry is getting warmer. The short-term prospects for retail sales still depend on the pace of recovery in the tourism industry and the local consumption intention under various external uncertainties.

According to Goldman Sachs, retail sales in Hongkong will continue to rebound this year, and the sales level will increase by 2% over last year. The annual growth level of sales in Hongkong from 2016 to 2020 will remain between 2% and 3%.

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According to the world clothing and shoe net, international brands are fleeing Hongkong central business circle because they can not afford huge rents. According to the data, the rent level in central Hongkong has exceeded the peak period in 2008, and the monthly rate of 1356 Hong Kong dollars per square meter is ranked first in the world and continues to grow.

However, the director of Knignt Frank retail department told the South China Morning Post reporter that it is a good time for other retailers to expand their tenants while looking for tenants to reduce rent.

Rambourg, the author of The Bling Dynasty, pointed out earlier that Hongkong is a familiar shopping destination for Chinese luxury consumers, while local mall tenants seldom try differentiated marketing strategies.

It is noteworthy that Harbour City and Times Square are being split up, but Kowloon said the research is still in progress.

At the beginning of March this year, Kowloon warehouse announced the launch of the new strategy assessment, which studied the distribution of some investment properties in the form of physical distribution to shareholders, and introduced the listing of the shares in order to allow the shareholders to have the opportunity to hold two listed companies at the same time. However, Wu Tianhai, chairman of the group, pointed out that at present, which investment properties were not allocated to the new listed companies, but this also meant that the Tsim Sha Tsui Harbour City and Tongluowan Times Square valued at up to 219 billion yuan would become an independent listed company.

At present, the latest valuation of investment property in mainland China and Hongkong in Kowloon warehouse is up to 319 billion 300 million yuan, which accounts for about 71.94% of the total assets value of the whole group.

The valuation of shopping malls and office buildings in Tsim Sha Tsui in Harbour City amounted to 164 billion 500 million yuan, equivalent to 37.06% of total assets, together with Times Square, which accounted for 68.6% of the estimated value of investment property.

Wu Tianhai said after the company's annual general meeting that the group had completed the technical feasibility study, but the commercial feasibility study is still in progress, so it has not been finalized.

As of today's release, the share price of Kowloon warehouse has risen by 0.08% to HK $64.7 per share, with a market value of HK $196 billion 300 million.

More interesting reports, please pay attention to the world clothing shoes and hats net.