Pioneering Ginza-style mall in Hong Kong in bad shape
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It is said that a commercial property can support three generations of a family in Hong Kong. The idea is that owning a commercial property is a sign of wealth as well as social status.
However, an investor who bought a commercial unit in Jordan Square in 1992 for HK$700,000 has sold it 24 years later for HK$100,000 (US$12,890). He lost 86 percent of his investment in the store, which has a saleable area of 70 square feet.
The shopping mall in which it is located is on Jordan Road, a five-minute walk from The Austin, a high-end residential complex. The mall has four stories and a floor area of 20,000 square feet. It was built by a local developer in 1992 and divided into 160 ministores.
In recent years, many shopping malls have described themselves as “Ginza-style”. The Ginza-style mall dates back to the 1980s in Japan, when the price of land in Tokyo was exorbitant in the prime Ginza district. Stores, restaurants and bars moved to higher floors of those malls to save on rent.
These malls usually had elevators, as customers knew beforehand which floor they needed to get off at.
I still remember when I first heard about a Ginza-style mall; it was in 1992, when Jordan Square opened for sale. The project had attracted great publicity, as it allowed ordinary people to own a retail unit for a relatively small amount. In fact, many local actress and singers invested in the project back then.
More of these Ginza-style malls appeared across the city after Jordan Square. And most of them failed in the end, because of chaotic management and limited marketing.
“I still remember when I first heard about a Ginza-style mall; it was in 1992, when Jordan Square opened for sale.”
But there are some successful examples, like Sin Tat Plaza and Ho King Commercial Building in Mong Kok, Rise Shopping Arcade in Tsim Sha Tsui and Island Beverly in Causeway Bay. All these Ginza-style malls have been popular with the younger crowd.
Nevertheless, the emerging online shopping trend has posed a great challenge to these physical stores, since online shopping sites offer a wider range of products at lower prices. Jordan Square was sold off-plan back then, and the buyers signed the contract after hearing the developer’s presentation.
However, when the building was completed in 1993, they found that the mall was smaller than they expected and the saleable area was less than what the developer had promised.
The developer was liquidated later as a result of lawsuits and a property market downturn. As a result, the independent owners of the stores in the building have taken over control. The water and power supply was cut off, and most of the stores failed to find a tenant. And the mall has even become a gathering place for drug addicts and the homeless.
Jordan Square has a market value of somewhat more than HK$10 million based on the recent transaction price of HK$100,000. There is room for an appreciation in value of more than 10 times at this prime location. A seasoned investor has reportedly already bought 11 stores in the building for between HK$100,000 and HK$470,000 each.
Questions & Answers
Q.What specifically caused many Ginza-style malls to fail in Hong Kong?
What specifically caused many Ginza-style malls to fail in Hong Kong?
Most Ginza-style malls in Hong Kong failed due to chaotic management and limited marketing. The emerging trend of online shopping, offering wider product ranges at lower prices, has also challenged physical stores.
Q.Why did the first investor mentioned in the article lose so much money on his commercial unit?
Why did the first investor mentioned in the article lose so much money on his commercial unit?
The investor sold his unit for HK$100,000, having bought it for HK$700,000 in 1992. The mall experienced chaotic management, limited marketing, and issues like power cuts, deterring tenants and buyers.
Q.What issues did buyers of units in Jordan Square face immediately after its completion?
What issues did buyers of units in Jordan Square face immediately after its completion?
Buyers found the mall smaller than expected and the saleable area less than promised by the developer. The developer was later liquidated, and independent owners took control, facing power cuts and difficulties finding tenants.
Q.Who currently controls the commercial units in Jordan Square?
Who currently controls the commercial units in Jordan Square?
The independent owners of the stores in the building have taken over control. This happened after the developer was liquidated due to lawsuits and a property market downturn.
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