New World Development Company Limited
22
Execu t i ve V i ce - Cha i rman ’s Repo r t
Hong Kong Property Investment
For offices, companies from Mainland China, especially
financial service institutions involving asset management
and securities businesses, favored the offices in core
commercial districts for which supply had already been in
shortage. According to the record of new leasing in Central
in the first half of 2016, companies from Mainland China
accounted for approximately 37%. While some multinational
enterprises had deferred their business expansion plans in
view of realigned strategies for business development, some
seeking to enlarge their market share in the Asia Pacific
region were seeking larger and more suitable office spaces
in core districts in Hong Kong for their business integration
to consolidate strengths for future business expansion.
According to statistics, with a mere 1.4% vacancy rate for
office buildings in core Central in the second quarter of
2016, rental performance was well supported in that locality.
For retail shops, the retail market of Hong Kong has reached
a critical point of structural adjustment, following the
change of consumption pattern worldwide and the change
of mix of inbound travellers from Mainland China, and in the
aftermath of the spanking expansion of selected major
international luxury brands in Hong Kong over the past
years. The overall retail sales performance of Hong Kong
was suppressed by the weak performance of luxury goods
such as jewellery and watches. Increasing operating costs
had led to the removal of some high-end luxury brands from
those street shops at prime retail locations, which were in
turn taken up by mid-range brands and mass market
products which addressed the daily needs of the general
public. Meanwhile, the rental performance of shopping malls
were well endorsed, as brands and tenants are more
inclined to rent properties at major malls for well-secured
visitor flow when they re-arranged their mix of outlets,
geographical coverage and product mix.
During the year under review, despite the soft retail market,
the Group’s gross rental income in Hong Kong increased by
5.9% to HK$1,573.2 million. The leasing properties attained
satisfactory occupancies. Hong Kong K11, which is located
in the traditional core retail and tourism district in Tsim Sha
Tsui, recorded an occupancy of almost 100% during the year
under review, with an average monthly pedestrian flow of
approximately 1.4 million, representing an increase of 5.1%
year-on-year. As an international high-end artisanal brand, a
revolutionary museum with retail experience, Hong Kong
K11 has been a popular spot for local consumers and it is
planned to introduce more new food and beverage concepts
together with some first-to-Hong Kong brands in the near
future.
