ANALYSIS OF HONG KONG PRIME RETAIL PROPERTY MARKET

In analyzing Hong Kong’s retail property market, in particular the prime shopping mall segment, Michael Porter’s Five Forces Analysis Model is used. According to Porter, corporations in any industry are constrained from maximizing profit not just by rivalry with their competitors but by four further competitive forces. These five forces shape competitive intensity. They are:

• Rivalry among competitors in the industry;
• Threat of new entrants;
• Bargaining power of suppliers;
• Bargaining power of buyers; and
• Threat of substitute products.

Below is the analysis:

• Rivalry among Established Competitors: Medium Pressure o Currently, major shopping malls in Hong Kong are primarily managed and owned by a handful of Chinese landlords, including Sun Hung Kai Properties, Henderson Land, Wharf Holdings, Hysan Development, Sino Land, Hang Lung Properties, as well as a few British-backed landlords such as Hongkong Land and Swire Properties. o Retailer demand is focused on prime locations in urban areas rather than secondary streets. These most sought-after locations are top choices for both global and local retailers seeking a presence in the city. Fierce retailer competition for the best locations means that landlords of prime shopping malls are allowed for jockeying for a better market position by select picking their right tenants and by upgrading their tenant and trade mix profiles. o With a common focus on selling luxury products and providing fine dining to affluent locals as well as high spending Mainland tourists who are visiting Hong Kong in increasing numbers, prime shopping malls are in head-to-head competition to lure visitors/shoppers. o Winners are the differentiated and the distinctive - those that can create a point of difference from their counterparts, and those present modern retail