Hong Kong Retail Real Estate Landscape Faces New E-Commerce Disruption 

Posted by Amrock

Once lagging behind other global cities, a new surge in e-commerce growth promises to disrupt and change the Hong Kong retail real estate landscape over the next few years, reports World Property Journal. A new report from JLL, the global commercial real estate services firm, cautions that Hong Kong retailers and landlords will need to embrace change.

Ninety percent of landlords expect e-commerce expansion

The article notes that the online sales market share for Hong Kong has lagged behind other comparable cities. However, that is changing. Online sales reportedly expanded at a compound annual growth rate (CAGR) of 15.1 percent between 2011 and 2016, compared to a CAGR growth rate of only 1.5 percent for overall retail sales. Business leaders see this trend continuing. A survey found 90 percent of Hong Kong landlords and 72 percent of Hong Kong retailers expect “significant growth” for the online sales market share over the next five years.

Physical retailers to embrace “omni-channel” retail

However, an increase in e-commerce is unlikely to shutter brick-and-mortar shops in Hong Kong. Instead, experts predict a rise in “omni-channel” retailing, combining online technology and physical retail storefronts for a holistic, personalized shopping experience.

Expanding online retailers to benefit from cheaper storefront rents

“[W]e are positive that physical stores will be in more demand than ever, but just their purpose and operation will change,” said Eric Cheng, local director of retail for JLL in Hong Kong. “The cost of opening a physical store has significantly lowered at this point in time following Hong Kong’s three-year slump in retail rentals. This offers a natural window of opportunity for online retailers looking to expand into the bricks-and-mortar world, allowing them to secure coveted retail spaces with more reasonable rental rates.”