Plaza 66 in Shanghai

SHANGHAI — For high-rolling shoppers looking to drop some serious cash in this town, nothing quite compares to Plaza 66. While SKP dominates in Beijing, Plaza 66 has for years retained its edge as the leader of luxury in Shanghai.

Other malls like HKRI Taikoo Hui and IFC also figure as important luxury retail spots, but offer a greater mix of accessible brands, lifestyle and dining. As a result, Plaza 66 has been one of the biggest beneficiaries of the repatriated spend to China. On Thursday, that point was brought home when its owner Hang Lung Group reported that the mall’s retail takings surged by 60 percent for the year ended Dec. 31; as the mall’s rental revenue also climbed by 34 percent against 2019 levels.

That far outpaces the wider consumer recovery in China. Government data released last week showed that overall consumer sales in China for 2020 actually contracted 3.9 percent — although in the fourth quarter it rose 4.6 percent year-over-year.

Hang Lung noted that the strong rebound began in April across their portfolio in Greater China. “Retail sales growth at malls with higher luxury content in the second half of 2020 more than compensated for the sales drop during the initial outbreak.”

“As a result, Plaza 66 and Grand Gateway 66 in Shanghai, Forum 66 in Shenyang and Center 66 in Wuxi recorded retail sales growth ranging from 9 percent to 72 percent against a year ago,” it said.

Grand Gateway, another Hang Lung property in Shanghai that’s positioned more affordably, saw a milder but still significant retail sales increase of 10 percent year-over-year. In general, the lower positioned the mall, the slower the recovery.

The company said of their lifestyle malls — namely Palace 66 in Shenyang, Parc 66 in Jinan, Riverside 66 in Tianjin and Olympia 66 in Dalian — that the recovery was “gradual,” caused by weaker spending in the non-luxury sector. Annual growth for those retail properties was negative, however, it noted that the properties returned to the same level in the fourth quarter of last year as in 2019, demonstrating evidence of a recovery.

In Hong Kong, where the firm is headquartered, the revenue trend was exactly flipped. Mall locations that catered to local communities with mass offerings such as Kornhill and Amoy Plaza were more resilient, whereas the group’s properties in Causeway Bay, a tourist-favorite haunt, suffered.

“Unlike the mainland portfolio, revenue and retail sales have yet to show signs of recovery. As the pandemic evolves, Hong Kong is certainly taking more time to recover,” the company added.

The challenges in Hong Kong forced Hang Lung Group’s overall business, which also includes hotel and office, to record a loss of 1,541 million Hong Kong dollars for the year.

Hang Lung Group is due to open a new mall towards the end of March called Heartland 66 in Wuhan, the city which first experienced the outbreak of COVID-19. New World Development, another major Hong Kong retail developer opened a K11 mall in Wuhan, its second in the city, last December.

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