Gucci spars with HK landlords as demand slumps

Hong Kong

LANDLORDS on Hong Kong's Russell Street a year ago could boast the highest retail rents in the world. Now they are adjusting to a new reality.

Burberry Group plc, Kering SA and jewellery retailer Chow Tai Fook Jewellery Group Ltd are pushing landlords to lower rents on existing properties as luxury brands are scaling back amid plummeting sales. TAG Heuer closed its Russell Street store last week, citing high rents and declining traffic.

Luxury retail sales have plunged amid China's economic slowdown and President Xi Jinping's austerity and anti-corruption campaigns, causing Hong Kong to relinquish the top spot to New York's Fifth Avenue in November and spurring the biggest drop in retail rents this year since 2009. Also contributing to slack demand are a weaker yen and euro, prompting Chinese tourists to favour Japan and France over Hong Kong, said Helen Mak, se…