Hong Kong’s Landmark mall to get US$1b upgrade with help from Hermes, LVMH

SINGAPORE – Hongkong Land Holdings and 10 of its retail tenants, including Hermes and Louis Vuitton, will invest US$1 billion (S$1.36 billion) to revamp a high-end mall in Hong Kong, in a vote of confidence for the city’s luxury retail industry.

The Singapore-listed developer on June 26 announced the plan to expand and upgrade its Landmark-branded retail properties in a bid to cement Hong Kong Central’s status as a luxury retail hub amid falling sales and rising competition.

Hongkong Land will invest US$400 million of its own funds, while the 10 tenants will foot the remaining US$600 million to create individual multi-storey stores across 220,000 sq ft of shop space over the next three years.

That is double the space now taken by the 10 brands – Cartier, Chanel, Dior, Hermes, Louis Vuitton, Prada, Saint Laurent, Sotheby’s, Tiffany & Co and Van Cleef & Arpels. They have, on average, 10-year lease commitments to Landmark. 

The stores will consist of three each in Landmark Atrium, Landmark Alexandra and Landmark Prince’s, and one in Landmark Chater. These four interconnected retail spaces make up the Landmark mall. The revamped space will include high-end Michelin-starred restaurants and 100 new food and beverage brands.

To make room for the expansion, the lowest two floors of office space in Landmark’s Prince’s Building and Gloucester Tower will be converted into retail space, and its tenants moved to other properties in Hongkong Land’s portfolio.

The bar and lobby of The Landmark Mandarin Oriental, which occupies the lower floors of Landmark’s Edinburgh Tower office block, will also be relocated.

Landmark will remain open for business as the upgrades are carried out from the third quarter of 2024. Rental income could take a temporary hit during this period, but will bounce back and grow as work is progressively completed over the next three years, the company said.

Hongkong Land’s chief retail officer Alexander Li said the transformation is needed for these luxury brands to be creative with their offerings and for Landmark to retain its competitiveness as a luxury retail destination in Hong Kong.

He also said Hong Kong residents account for 80 per cent of Landmark’s sales, and that 70 of its top shoppers spent a combined HK$1 billion at the mall in 2023 and HK$500 million so far in 2024.

Some 85 per cent of Landmark’s customers return to shop at the mall and continue to spend more every year. On average, its VIP shoppers spent HK$1 million (S$174,000) each in 2023.

The move will enable the 10 brands to meet the evolving demands of luxury shoppers by offering more categories of products and creating private spaces and personalised services to enhance the shopping experience, Mr Li said.

Mr Alvin Kong, an executive director at Hongkong Land, said: “We certainly remain very confident about the long-term prospects of Hong Kong, given the concentration of wealth and the development of the city.”

He noted that the investment will strengthen Hongkong Land’s portfolio in Hong Kong Central, where it is one of the biggest developers, and “future-proof” the business.

The revamp, one of the largest in Landmark’s 44-year history, comes amid heightened competition from other luxury shopping hubs in the region like Singapore, Dubai and Tokyo, as well as globally, in London, Paris, Milan and New York.

It also comes amid a slump in retail sales in the city, with the value of transactions falling 14.7 per cent in April from a year earlier, the most since July 2020, according to government data. Sales of clothing and footwear declined 24 per cent, while those of jewellery and watches dropped almost 29 per cent.

Hongkong Land owns and manages over 9.1 million sq ft of prime office and luxury retail property in Asian cities such as Hong Kong, Singapore, Beijing and Jakarta.

The company’s revenue fell 18 per cent to HK$1.84 billion in 2023.

Shares of Hongkong Land, which are 50 per cent owned by conglomerate Jardine Matheson Holdings, closed flat on June 26 at US$3.20.