(Yicai Global) Oct. 28 -- Chinese consumers remain demanding on product quality and although some may be influenced by the economic slowdown and to some degree cut back spending on luxury items, in general the high-end market will not be greatly affected, the vice chair of Hong Kong commercial real estate developer Hang Lung Properties said.
“Wealthy people will always want to buy the latest products,” Adriel Wenbo Chan said in an exclusive interview with Yicai Global on Oct. 26. “Judging from our business data, there has not been a huge impact on the luxury goods market in China and hopefully this will continue in the future.”
There has, though, been a shift in people’s buying habits since Covid-19, Chan said. Chinese shoppers now tend to buy luxury goods at home, when previously they would travel abroad to purchase them.
And this trend is expected to continue even once the pandemic is over, Chan said. This is because a relationship has now been established between buyers and sellers of luxury goods on the mainland, and because local vendors have a better understanding about what the Chinese consumer wants, compared with their overseas peers.
Chinese stores of luxury brands all stock the latest products and have ample supplies, so people will not be as enthusiastic about travelling abroad to do their shopping compared with before the pandemic, he said.
To take advantage of this trend, Hang Lung is linking arms with French fashion house LVMH Moët Hennessy Louis Vuitton on sustainable development in the mainland, the two parties said on Oct. 25. The partnership covers more than 90 stores operated by 26 of LVMH’s brands that are located in Hang Lung properties across seven cities.
There is still plenty of room for Hang Lung to grow in Shanghai, even though competition is fierce, Chan said. Rival Sun Hung Kai Properties, for instance, is building the Xujiahui Center across the road from Grand Gateway 66, a complex developed by Hang Lung in downtown Shanghai.
“We embrace healthy competition, which will only make us stronger and improve our services and products,” Chan said.
The Covid-19 pandemic has caused some irreversible changes to the commercial property market, but demand will rebound. Although growth might not be reflected in turnover and floor area, it can be seen in the quality of the properties that are proving popular.
“Consumers will continue to upgrade their consumption patterns and this is an opportunity that we wish to seize,” he said.
“More people are using outdoor space since the pandemic, and we might not have enough green spaces at the moment,” he said.
“I believe that in the future, shopping malls will move in this direction and focus on having more outdoor, sustainable and environmentally friendly spaces. And their value is only going to get higher and higher,” he added.
Hang Lung has been looking for suitable investment targets for a long time, Chan said. “I believe the first- and second-tier large cities are still good destinations for investment.”
Although we have some apartment projects on previously bought multi-purpose land plots, we have never purchased land for the sole purpose of building residential properties and this strategy will not change, he added.
Editors: Tang Shihua, Kim Taylor