As Chinese spending plunges, Li Ka Shing's luxury mall in HK sits empty

In first 7 months of 2024, sales of luxury goods were 42 per cent below 2018's level

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In Hong Kong's Tsim Sha Tsui district, the mock classical 1881 Heritage mall used to lure queues of mainland Chinese tourists eager to shop at boutiques operated by brands such as Tiffany, Cartier and Chopard.

Now it attracts neither crowds nor brands. Only three of the more than 30 units at the mall owned by billionaire Li Ka Shing's CK Asset Holdings are occupied and its colonnaded courtyards are quiet.

In nearby Canton Road, a shop previously rented by Swatch Group's Omega for about HK$7.5 million (S$1.3 million) a month is leased to a bank for 80 per cent less, according to real estate agents familiar with the deal. Over in Causeway Bay's Russell Street, a Transformers-themed fast-food restaurant has taken the place of Burberry. Its rent is 89 per cent below the HK$8.8 million the British firm was forking out in 2019, the agents said, declining to be identified because the matter is private.

China's collapse in high-end spending has shaken investor confidence in luxury brands across the globe, as companies from LVMH to Richemont and L'Oreal report falling sales in the region. Nowhere is the scale of that decline in demand more evident than in Hong Kong, which was for many years the favoured destination for China's nouveau riche to splurge on designer handbags and Swiss watches.

"Hong Kong's luxury market was once a paradise, but now it's fallen into the abyss," said Dr Edwin Lee, founder of Bridgeway Prime Shop Fund Management, which owns a portfolio of retail properties across the city. "The days when tourists came to buy luxury products without thinking are gone."

A spokesperson for CK Asset said the 1881 Heritage mall is revamping its retail mix and plans to offer more casual F&B outlets as well as brands targeting Gen Z shoppers.