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JD.com’s US$1.3b expansion could test Hong Kong’s footfall-driven retail property model

Chinese e-commerce firm builds network of stores and warehouses that analysts say may reduce reliance on footfall for some retailers

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JD.com has invested more than US$1.3 billion in Hong Kong property over the past two years, building a network of stores, warehouses and other assets. Photo: Handout
Peggy Ye

JD.com’s rapid expansion in Hong Kong could challenge the property model that has long made the city’s busiest streets and shopping centres its most valuable, analysts say.

The Chinese e-commerce giant has invested more than HK$10 billion (US$1.3 billion) in Hong Kong property over the past two years, building a network of stores, warehouses and other assets that analysts said could reduce the importance of footfall for some retailers while increasing the value of logistics hubs and other strategically located sites.

The investments are part of a broader push into Hong Kong by JD.com, which in June said it had invested HK$35 billion in the city across retail, logistics, technology and other businesses.

For decades, Hong Kong property values have largely been driven by location: the more people passing through a street or shopping centre, the higher the rent it could command.

If Hong Kong continues to reduce everything to land prices, rental values and footfall, then JD will be mistaken for just another big tenant
Francis Neoton Cheung, Chief Executive’s Policy Unit Expert Group

Analysts said JD.com was testing a different model. Its stores, warehouses and logistics facilities were valued not only for the income they generated, but also for their role in a wider network moving goods to customers.

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