For years it was the world’s most expensive shopping street, overshadowing anything Paris or London had to offer, its pavements brimming with shoppers hunting for Prada bags, Chanel perfumes and Blancpain watches.
But Russell Street, in Hong Kong’s bustling Causeway Bay, has lost its lustre – and a lot of its high-end tenants. The luxury fashion houses are slowly making way for more humble retailers.
One shop that used to house the Swiss watch maker Tissot is now home to a mobile phone accessories vendor paying just 6 per cent of what its predecessor forked out in monthly rent.
“You never know, one day we may see a convenience store on Russell Street or a hotpot restaurant,” said Oliver Tong, head of retail at property services firm JLL in Hong Kong.
The amount of empty retail space on the glitzy boulevard doubled during the first three months of this year as a succession of international brands decided enough was enough. Already struggling for survival after months of civil unrest crippled Hong Kong’s economy, the final blow for many came this year with the coronavirus pandemic, which killed off any remaining consumer sentiment.
Colourmix, a cosmetics chain, will close its shop on Russell Street, for which it pays HK$700,000 a month, when its five-year lease expires in October, according to agents familiar with the matter.
The landlord is now asking for HK$600,000 a month, 14 per cent lower, in a sign retail rents have not yet hit rock bottom.
On Monday, large bright red and yellow banners promoting “removal sales” and discounts of up to 80 per cent were visible at the door of the store and pasted on shelves occupied by exquisite Chanel and Gucci perfume bottles and jars.
Colourmix is the sixth of Russell Street’s 27 stores to call it a day since November, after Prada, Bonjour, Rado, Blancpain and Tissot. The departures have come despite some landlords slashing rent to accommodate their financial difficulties.
“It is hard to keep these retailers, particularly those focusing on tourists’ business, from shrugging off generous rental concessions. It is a fact, although brutal, that tourists will not be coming back soon, and everybody know it,” said Tong. “And it is also difficult to find new takers as no one dares to expand at this moment.”
Shops abandoned by Italian fashion house Prada, luxury watch sellers Rado, and Blancpain were still sitting idle when the Post visited on Monday.
At the very end of Russell Street, the 800 sq ft shop that has hosted Swiss watch brand Tissot for nine years sells accessories, such as phone charging wires and plastic bathroom hooks, for as little as HK$1.
The shop, which secured a six-month lease, is only paying HK$100,000 per month, just 6 per cent of the HK$1.43 million monthly rent paid by Tissot, according to agents and Land Registry documents.
Russell Street is located in the heart of Causeway Bay, one of Hong Kong’s busiest shopping districts. On the corner of Russell Street and Matheson Street stands Times Square, a hugely popular shopping centre.
The 250-metre long street that used to be lined with upmarket brands was a microcosm of Hong Kong’s once robust luxury retail industry.
It used to charge annual rent of US$2,800 (HK$21,700) per square foot, surpassing New York’s Fifth Avenue and the Avenue des Champs-Élysées in Paris as the world’s most expensive shopping strip, according to a report by Cushman & Wakefield.
However, it has lost its shine as international and local brands have shut up shop one after the other amid the city’s devastating protest movement, which was swiftly followed by the coronavirus pandemic.
The vacancy rate of shops in Russell Street has soared from 5 per cent at the end of last year to near 10 per cent at the end of March, according to JLL. It will increase further when Colourmix moves out of its premises, for which a new occupant has not yet found, and the accessories shop finishes its lease.
Rent in Causeway Bay dropped 15 per cent in the first three months of the year, according to Cushman & Wakefield, and is expected to slide further. The property consultancy foresees that in the six months ending June, rent in most “core retail districts”, including Causeway Bay may drop as much as 40 per cent.
“Landlords and retailers have to adjust to the fact that in the next two to three years, the 7 million locals are their major target,” said JLL’s Tong, suggesting that the street will shift from catering for tourist consumption to trying to capture local spending.
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