FT.com / World Reports / Hong Kong 2005 - Luxury: Unabashed and unbridled capitalism

Published: September 19 2005 16:53 | Last updated: September 19 2005 16:53

It may be a strange reputation to covet but, once again, Hong Kong is ready and eager to take on the mantle of the city of conspicuous consumption.

In 1889, Rudyard Kipling remarked during a brief visit that “everyone smells of money” and unbridled capitalism has been Hong Kong’s preferred state ever since. Down the decades the former fishing village has been the place to make money in part, perhaps, because it has remained unscathed by a traditional class system. Certainly, this is not a city where you have to apologise for being rich.

It is true that years of economic downturn – brought on by a regional financial crisis, various outbreaks of diseases and what many considered to be a weak leadership – have toned down the notional value of wealth.

It is more acceptable, for example, for individuals to pursue interesting, alternative vocations which do not pay well. After all, you would be considered lucky to have a job in the lean years.

Still, as one of the most expensive cities in the world, it is hard to be poor and be considered successful in Hong Kong. In fact, it is a particularly bitter fate to be poor in Hong Kong – there is no minimum wage and very little social security. At the same time, it is a great place for the rich – disposable income is greatly boosted by a low tax regime.

And so, big money is being spent again soon after a recent low-point for the economy, the Sars epidemic in spring 2003, as property prices rocket and the tourists return.

One of Hong Kong’s biggest landlords, Jardine Matheson, was one of the first local companies to foresee the recovery.

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A couple of years ago, senior management of the old “hong” put together a plan to smarten up much of the central business district on Hong Kong island. A total $210m is being spent on expanding the Landmark. Next to a revamped office building, the shopping mall will house about 250 designer stores, including the just-opened 60,000 sq ft Harvey Nichols, owned by local businessman Dickson Poon. Later in the year, it will also see the opening of the world’s fourth Louis Vuitton “concept store”, a boon to the city’s many shopaholics.

The Landmark investment has also seen the early September opening of a Mandarin Oriental hotel, a chain owned by the conglomerate.

Follow one of the many covered footbridges in the area and you will find yourself at the IFC complex, owned by a local consortium, which opened two years ago. Competitive rates meant that the new 88-storey office block did not take long to draw tenants, including the Financial Times. But recently, as the retail market picked up, the mall has become a popular shopping destination, offering an 82,000 sq ft Lane Crawford department store – a home grown, high-end retail chain – while next door stands the new Four Seasons hotel and service apartments, providing luxury accommodation with a fantastic view of the harbour.

The question is, has investment in Hong Kong’s luxury sector gone over the top? Susanne Hatje, general manager of the Landmark Mandarin Oriental, does not think so.

“It’s true that there is a number of very good hotels opening in Hong Kong but you have to remember that, during Sars, many hotels had closed down, so the total inventory of rooms in the city has not necessarily gone up,” she says.

She also has confidence in local spending power. In fact, the hotel is counting on its bar, restaurant and 20,000 sq ft spa attracting local residents who are willing to pay a premium for the best.

With a one hour 20 minute Thai massage at the Oriental spa costing $185 and a vegetarian dish (albeit a complicated one involving Australian chestnuts) at Amber priced at $87, the hotel is certainly going for the top end.

The survival of these new temples to Mammon will be tied more to Hong Kong’s fortune as a financial hub and conference centre – with events which draws millions of visitors a year – than anything else.

Any suggestion that these establishments will benefit from the new Hong Kong Disneyland is treated as a temporary lapse in good taste.

“The direct impact of Disneyland on the high-end market is minimal. After all, only tourists, mainly from China and southeast Asia, who can’t afford to go to the other Disneylands will come to the one in Hong Kong,” says a hotel and retail analyst at an investment bank in Hong Kong.

Ms Hatje agrees that people who visit Hong Kong’s Disneyland are likely to stay elsewhere, while guests in her 450-600 sq ft rooms, which offer 400 thread-count linen and access to the 37°C tepidarium chairs in the spa downstairs, are likely to be long-haul visitors.

Life in Hong Kong is beautiful again, if you can afford it.