HONG KONG (Bloomberg) — Hang Lung Properties Ltd., which earns more than half of its rental profit from its China malls and offices, said a recovery in Hong Kong retail sales depends a change in negative attitude toward mainland visitors.
“Retail sales definitely haven’t peaked,” Ronnie Chan, chairman of the Hong Kong-based company, said in an interview today. “There are still a lot of mainland customers coming here. The problem is whether you welcome them or not. It’s definitely a big factor.”
Hong Kong’s retail sales dropped for five straight months since February amid a slowdown in visitor arrivals from the mainland, as China’s economic growth moderated, and a decline in demand for big-ticket items such as jewelry and watches. Chief Executive Leung Chun-ying in May said he’s considering limiting arrivals from across the border as tensions rise between local residents and mainland Chinese tourists, the biggest group of visitors to the city.
“I’m not too worried,” Chan said. “When jobs are affected, people will change.”
The impact of the negative sentiment on the city’s retail sector is greater than that of China’s crackdown on corruption, Chan said. The anti-graft campaign, which has hit demand for luxury goods in China, is “not that big a part in Hong Kong,” he said.
Hang Lung share have declined 3.3 percent this year, compared with a 5.8 percent gain in the benchmark Hang Seng Index.
Retail sales fell 6.9 percent in June from a year earlier to HK$37.1 billion ($4.8 billion), the government said yesterday. Growth in mainland visitors slowed to 8 percent that month, compared with the 20 percent year-on-year gain in the first quarter, according to the city’s tourism board.
“We currently do not see resumption of stronger spending power in the mainland visitors coming to Hong Kong,” Barclays Plc analysts led by Phoebe Tse said in a report yesterday. “Any government policies that limit the growth of mainland visitor arrivals remains a negative risk.”
Hang Lung said yesterday its rental income in Hong Kong rose 7 percent in the first half to HK$1.6 billion and its rental profit in China gained 14 percent to HK$1.9 billion.
In Hong Kong, about half of the company’s properties are retail, including two shopping centers in the Causeway Bay district, one of the most expensive precincts for retail rents in the world. It operates seven malls in China and is opening one more in Tianjin in September.
Its properties in Hong Kong and Shanghai will continue to see steady rental growth in the second half, the company said in a statement yesterday.
Peter Kim's Los Angeles-based premium denim line has always had its finger on the pulse of youth. This season, novelty is back in a way reminiscent of early Aughts, with studs, lace-ups, racing waxed denim and more. For more highlights if some of the key brands at the Vegas trade shows, go to WWD.com. #wwdfashion (📷: Patrick Gray; Styles by @thealexbadia; Story by @karihamanaka and @marcy_wwd)
"I was driving back on Saturday afternoon from the beach, and I just saw this sign saying 'Skydiving for $95.' And I was like, I can't not sky dive for $95," says Tom Bateman about a moment in Hawaii while shooting "Snatched." #wwdeye (📷: @vsteves; Interview by @ktauer; Styled by @thealexbadia)