The retail property market in Hong Kong is entering a new era thanks to the influx of Chinese mainland shoppers brought by the Individual Visiting Scheme.

According to a latest report released by international property advisor DTZ Debenham Tie Leung, since Hong Kong economy recovered and the launch of the Individual Visit Scheme (IVS), retail sales have been enjoying exponential growth that has sent the overall retail property market into a new era.

In the first six months of 2005, total retail property sales has increased to 103.3 billion HK dollars (13.4 billion US dollars) , compared to 191.55 billion HK dollars (25 billion US dollars) in the whole year of 2004.

Boosted by strong retail sales, rentals of prime retail shops also increased over the past two years, with retail rents in Central and in Causeway Bay almost doubled. The two places are the most prosperous commercial area in Hong Kong.

"The remarkable surge in retail rentals reflected a strong demand for retail properties in the market," said Lawrence Heung, DTZ Debenham Tie Leung's Director of Retail Agency.

Observers hold that robust retail sales performance is partly attributed to the launch of IVS, which raises the overall spending on retail goods by an influx of mainland visitors, whose numbers increased from an average of 5.02 million per year during 2000- 2003, to 5.88 million in the first six months of 2005.

"Equally significant is that among all overseas visitors, mainland visitors are the most willing to spend on shopping, with each visitor spending close to 3,000 HK dollars (390 US dollars) on average, nearly double that of US shoppers," said Heung.

While mainland visitors are undoubtedly giving a significant boost to domestic retail sales, Heung admitted that local Hong Kong shoppers remain the key driving force of Hong Kong's retail market, the landscape of which has changed due in part to a change in the profile of local shoppers, and their associated shopping pattern.

"Shoppers nowadays are typically in pursuit of young, trendy and fashionable brands, as well as a completely different and rewarding shopping experience. This has made the replacement of conventional department stores with various smaller multi-brand units an inevitability for landlords in order to give their malls an exciting and trendy image that would suit young shoppers' needs, while boosting their level of rental income," said Heung.

Against such a backdrop, two long established Japanese department stores, Mitsukoshi and Seibu, were forced to vacate their existing stores in Causeway Bay when their contracts expired. Their landlords planned to divide up the large space into smaller retail outlets, thereby introducing specialty or stylish stores.

Meanwhile, Lane Crawford, another upscale retailer, has started its transformation plan by investing 120 million HK dollars (15 million US dollars), aiming to present the "younger" generation with a new and trendy look that would better meet their needs.

Looking ahead, Heung said that "with the launch of Disneyland in a few days, Hong Kong is set to be flooded with an increasing number of tourists, further propelling the development of the retail industry."

Source: Xinhua