How Brooke Husband Limited has worked with a developer to meet the changing consumer demand in Hong Kong
Situated in a highly strategic location within the Pearl River Delta, Hong Kong has seen significant growth in tourism over the past twenty years. This has led to increased demand for retail space as well as changes in shopping habits and consumer behaviour. Developers are combining data and creativity in order to ensure that they are able to meet this changing demand.
The Pearl River Delta Economic Zone is nine times bigger than New York City
Hong Kong is situated within the Pearl River Delta in Southern China, also known as the “Greater Bay Area”. Not only is Hong Kong integral to future plans associated with enhanced connectivity and interaction between major cities in the Greater Bay Area, it experiences very high levels of visitor arrivals. More than 60 million tourists visited Hong Kong in 2018, an increase of 3.6% from the previous year.
According to Singapore Management University, due to the rising number of mainland visitors to Hong Kong, the gross proceeds of the retail industry in the city grew 1.3 times between 2002 and 2011. However, the retail floor space only increased by 30 percent during the same period.
Demand has outstripped supply and led to a steep rise in rents.
Developers in Hong Kong are eager to create flexible, mixed-use space, which can adapt to the future evolution of consumer demand.
Chris Brooke, RICS President and co-founder of Brooke Husband Limited, a property consulting firm based in Hong Kong, was part of a multi-disciplinary team asked to advise a Hong Kong developer preparing a tender for the right to develop and manage the RDE development at Sky City – one of the largest commercial projects in Hong Kong’s history. The project will comprise retail, dining and entertainment space with a gross floor area of approximately 350,000 square metres.
Brooke Husband provided advice regarding the fundamental development drivers impacting upon the project and the optimum design concept associated with the scheme.
The developer appointed a team to provide advice based upon international best practice and standards, as well as one which could draw on global experience to provide objective professional advice in relation to the optimum way forward. Brooke says: “RICS thought leadership proved very helpful in ensuring we gave the client the most up-to-date thinking regarding mixed-use commercial development.”
For a project of this scale to be successful it needs to appeal to both residents of, and visitors to, Hong Kong, as well as the broader Greater Bay Area population of almost 70 million people.
To establish both the catchment area of the development and likely supportable floor area, Brooke says: “We had to analyse a variety of data sources to derive a forecast of demand for the individual components of the scheme. However, it was not just about the data. We had to think creatively to formulate a development concept that was sufficiently flexible such that it could adapt to the continued evolution of retail, dining and entertainment in Hong Kong.”
To maximise the time visitors will spend within the retail space, it was necessary to incorporate additional uses and concepts such as co-working to help optimise the level of on-site expenditure.
The developer based their tender submission on the development concept formulated by the project team. The client was awarded the development and operating rights.
We looked at global best practice in relation to the design and construction of mixed-use development concepts in order to optimise the composition of the project.
Brooke believes it is crucial to focus on the changing market and the needs of the customer. He says: “The only way to do this as a sector is to work and collaborate with leading thinkers, influencers and decision-makers who are at the cutting edge of change.”
Given the ongoing evolution of the way in which real estate is owned, built and occupied, combining a data-driven approach with an element of creativity and innovation will be increasingly important to ensure that large mixed-use projects continue to be successful in the future.
Brooke adds: “Practitioners must stay at the forefront of current thinking. RICS is an extremely rich resource for this, given the leading role the organisation plays in shaping the built environment globally, the thought leadership and training it provides its members, and of course the globally recognised standards it upholds.”