Luxury brands are expanding their presence in the flagship Hong Kong mall of the K11 Group, as the high-end real estate arm of billionaire Henry Chengâs New World Development Co. bets on a rebound in the cityâs premium retail sector to help ease property-market woes.
The expansion at K11 Musea in Hong Kongâs prime shopping hub Tsim Sha Tsui includes store upgrades by labels such as LVMHâs Loewe and Kering SAâs Saint Laurent and Balenciaga, as well as a new store by Prada SpA, the group said in a statement to Bloomberg News.
Other brands planning a revamp of their stores include Italian fashion house Brunello Cucinelli SpA, Cie Financiere Richemont SAâs Van Cleef & Arpels, and Swiss watchmaker Audemars Piguet Holding SA. Collectively, the upgrades will double the footprint of the seven luxury labels in the mall to more than 30,000 square feet, K11 said.
The statement confirms an earlier Bloomberg report about Pradaâs new store at K11 Musea.
The K11 mallâs luxury pivot offers one of the first clues to New Worldâs turnaround plans after the developer, which has been grappling with higher debt levels than its peers, issued a warning last month of an expected loss of up to HK$20 billion ($2.6 billion) for the financial year ended in June.
A significant part of the decline reflects slumping property values as Hong Kong struggles with one of its worst real estate market routs due to high interest rates and a broader economic slowdown.
Major landlords in the financial hub are pinning their hopes on luxury giants and their appeal to high-net worth customers who are among the least affected by the downturn. Global brands, many of which downsized in Hong Kong during its Covid-19 isolation, are also re-evaluating the city, lured by rents in the core shopping districts that have plunged as much as 90 percent from the pre-pandemic levels.
âWe are excited that many leading luxury brands are expanding at K11 Musea, especially in the context of current Hong Kong retail sector,â said Richard Cheung, executive vice president of the K11 Group, in the statement.
The K11 brand malls have been a key growth driver for New Worldâs investment property sector. In the six months ended December, Musea recorded a 41 percent increase in sales from the year before, mainly driven by luxury spending, beauty care and cultural activities, according to New Worldâs financial report.
The brand, launched by New World chief executive officer â and Henryâs eldest son â Adrian Cheng, leans heavily into arts and culture elements for its properties. Musea is peppered with artwork displays and has hosted several high-profile events in recent months, including Louis Vuittonâs first ever fashion show in Hong Kong last year and an exhibition this summer of beloved Japanese cartoon character Doraemon.
The month-long exhibition contributed to a 40 percent rise in average tourist spending at Musea, with foot traffic up 30 percent during the opening weekend, New World said in a newsletter in July.
By Shirley Zhao
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