Pioneering Ginza-style mall in Hong Kong in bad shape

May 03, 2016 18:37
Not all property investments are a one-way ticket to wealth. Jordan Square has fallen on hard times. Photo: Wikipedia

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.

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.

This article appeared in the Hong Kong Economic Journal on May 3.

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist