Europe's leading fashion houses are a familiar sight in Hong Kong's shopping malls, attracting affluent customers from around the region

Hong Kong's sophisticated consumer market has long been acknowledged by the presence of the world's leading fashion houses. Now, however, the availability of affordable A-Grade commercial rentals, combined with a surge in high-spending tourists from the Chinese mainland, adds even more incentive.

Upmarket brands such as Louis Vuitton, Christian Dior, Hermes, Ermenegildo Zegna and Dolce and Gabbana are taking up to 10,000 square feet for flagship stores in Central, including Prada and Yves Saint Laurent Rive Gauche's "new concept" stores in the lavishly refurbished Alexandra House. High-end Spanish fashion label Zara opens its first Hong Kong store in the IFC Mall this month, while the first Asian flagship store of leading Belgian ladies fashion brand SCAPA opened in March.

Prada's launchpad to China

"There is a strong affinity between Prada and the local clients in Hong Kong, who are able to fully appreciate the design content of our product lines," said Giovanni Di Salvo, general manager of Prada Asia Pacific. "Our store opening this month at Alexandra House will be Prada's largest flagship store in Asia outside of Japan. It will serve as a launchpad for the group's expansion efforts in the Chinese mainland, which currently boasts the highest growth rate of all the countries in which Prada currently operates."

According to Norman Leung, director of retail at Hongkong Land, Hong Kong has always been an important market for luxury brands with a significant local affluent customer base that has strong demand for high quality luxury products. Because of its high concentration of luxury brand representation, Hong Kong is also an attractive shopping destination for affluent customers around the region, including visitors from the mainland, he added.

"The decision by Prada and Yves Saint Laurent Rive Gauche to open new stores in Alexandra House represents a gratifying and positive vote for Hong Kong's Central  district as a premier location for high-end fashion retailers and their boutique stores," Mr Leung said.

Affluent tourists key customer base

Luxury brands also see Hong Kong as a showcase for building brand awareness and product knowledge amongst affluent mainland visitors, he added. "Having key store representation in a prime location like Central enables them to effectively reach affluent mainland visitors, while ensuring a solid base of local shoppers to support sales turnover."

Lawrence Wu, leasing general manager for Sun Hung Kai Real Estate Agency, said numerous international retailers are keen to come to Hong Kong as a springboard to the bourgeoning mainland retail market. Hong Kong is also a showcase for affluent mainlanders who see the city as a shopping destination for luxury goods.

"Hong Kong is a very cosmopolitan city with a large middle-upper income group having a strong fashion flair," Mr Wu said. "It is the most fashionable city in Asia outside Tokyo, and many brands build their image stores in Hong Kong as the springboard to the huge potential of the mainland market.

"Hong Kong enjoys a pricing advantage because of China's import tax and 17 per cent VAT, and also offers a much wider range of choice than is currently available in China. Tourists feel safe that they are buying the genuine merchandise in Hong Kong," added Mr Wu.