Hang Lung lures luxury labels to Shanghai annex
Flagship shopping centre to house 20 new high-end boutiques in two years
Developer Hang Lung Properties is targeting discerning mainland consumers’ penchant for luxury goods as it prepares to undertake the expansion of its flagship shopping centre in Shanghai, according to a top executive.
The expansion of Plaza 66, which housed the Shanghai flagship stores of Hermes and Dior, would focus on high-end luxury and bring new experiences to customers and stores that were completely new to the mainland, said Janice Lam Na-cheung, director of mainland business operations at Hang Lung.
“Consumption power in China is still very steady, and Chinese customers and our members are telling us they have confidence in consumption,” Lam said.
The company has obtained approval from the local government to utilise an unused area to expand the 55,000 square metre mall in West Nanjing Road, Jingan district.
The expansion, which is expected to be completed in 2026, will provide an additional gross floor area of about 3,000 square metres that will be able to accommodate 20 stores. Hang Lung also owns and operates Grand Gateway 66 in the financial megapolis.
Beijing has pinned high hopes on consumption to drive up and consolidate the economic recovery this year. While the mainland reported better-than-expected economic growth of 5.3 per cent in the first quarter, retail sales were sluggish, growing by 3.1 per cent year on year last month, compared with the 5.5 per cent growth in January and February.
The global personal luxury market is expected to reach US$464 billion by 2025, and US$606 billion in 2030, growing at an average annual rate of 6 per cent, according to PwC’s mainland and Hong Kong luxury market report released last week.
Meanwhile, the mainland was expected to replace the United States as the biggest luxury market, worth US$148 billion, in 2030, the report said, highlighting that in the next 30 years, some 92 trillion yuan (HK$99.4 trillion) of wealth on the mainland would be passed down to the second generation of high-net-worth individuals.
Even at the height of the Covid-19 pandemic, the number of members spending more than 1 million yuan at Plaza 66 increased five-fold in 2021 compared with 2019, according to Hang Lung, which will release the latest figures with its interim earnings in July.
Hang Lung categorises its members into five tiers, with
Emerald and Sapphire being the top two levels. While membership to Emerald is by invitation only, Sapphire comprises members spending 1 million yuan or more a year.
Lam said the customer base of the mainland’s high-end retail market was “getting younger” because of the fast-paced economic development. As a result, this generation of customers was continuing the previous generation’s consumption pattern, she said.
About 75 per cent of its Plaza 66 and Grand Gateway 66 members were under 39 years old, she said, adding that luxury brands were launching youthful products aimed at the segment with a higher spending power.
The pursuit of quality and how brands are perceived are very different from before, according to Nicholas Poon, general manager of Grand Gateway 66.
“People are attaching greater importance to some emotional needs than prices,” he said.
Hang Lung has been actively investing in the commercial and residential real estate market on the mainland since 1992. The mainland business accounts for 68 per cent of its rental income, according to its last annual report.
It has seven office projects in six cities on the mainland and five residential projects in Shanghai, Wuxi, Kunming, Wuhan and Shenyang.
Founded in 1960, Hang Lung Properties is 60 per cent owned by Hang Lung Group.
Current group chairman Ronnie Chan Chi-chung, who has been in the position since 1991, will retire on April 26, with his son Adriel taking charge, according to recent filings to the Hong Kong stock exchange. The senior Chan, 74, did not plan to assume any non-executive director’s role after his retirement, the filings showed.