K11 MUSEA has over 30% of its retail space undergoing lease changes, focusing more on top luxury goods and high-end living, with new brands expected to see double-digit rental growth

New World Development (017) subsidiary K11 MUSEA, an international cultural retail landmark, is undergoing a comprehensive brand upgrade. The first phase will update over 30% of the retail space and introduce more than 60 new brands, including several international luxury brands. K11 Hong Kong CEO Lin Haozhe stated that with some leases expiring, this upgrade marks the mall's increased focus on the high-end luxury market. The first phase of the upgrade is expected to be completed within this year, with related rental spaces anticipated to see double-digit increases. Retail Outlook Cautiously Optimistic, Increasing Proportion of Southeast Asian and Middle Eastern Tourists Lin Haozhe expressed cautious optimism about this year's retail market, noting that events at Kai Tak Sports Park are driving surrounding consumption. Approximately half of K11 MUSEA's foot traffic consists of visitors from Hong Kong and the other half local customers, with about 90% of tourists being from mainland China, although the proportion of Southeast Asian and Middle Eastern customers is steadily increasing. Positive Hotel Bookings for May Day Golden Week Regarding the performance of this year's "May Day Golden Week," he revealed that hotel booking data in the surrounding area is positive, and there has been no noticeable impact on visitors from the Middle East. He pointed out that the mall will host events such as music festivals from March to May and plans to hold the Victoria Harbour Music Festival again this summer, inviting several internationally renowned DJs to perform in Hong Kong for the first time, further boosting foot traffic and sales. When discussing local consumption trends, Lin Haozhe indicated that the situation of "not wanting to consume" has stabilized in the years following the reopening, with no sharp increases observed. He mentioned that although online shopping has risen, it is mainly focused on daily necessities and has little impact on the higher-end luxury market. Record High for Luxury Brands, Expansion of VIP Spaces Lin Haozhe stated that K11 MUSEA, through this upgrade, is transforming its positioning from a "comprehensive cultural retail landmark" to a "consumption destination for top luxury and premium lifestyle fashion brands," with the number of luxury brands reaching a record high. He noted that several brands are expanding their retail spaces as part of the upgrade plan and adding exclusive VIP service areas, such as Audemars Piguet's AP HOUSE, which has nearly doubled its space on the fifth floor, featuring a full Victoria Harbour view terrace for hosting VIP clients. He continued that brands choose to enter or expand based mainly on K11 MUSEA's proximity to the Kai Tak Sports Park's transportation network, along with its superior geographical location and high-end facilities. Five-Year Upgrade Plan, First Phase Expanding International Luxury Brands The upgrade work at K11 MUSEA will last five years, with the first phase focusing on the expansion of international luxury brands, including the opening of an expanded Audemars Piguet AP HOUSE, Balenciaga and Brunello Cucinelli upgrading to duplex stores, Delvaux opening its flagship store in Hong Kong, and Van Cleef & Arpels expanding to duplex stores, among others. Additionally, flagship stores for Dior Beauty, Loewe, Miu Miu, Prada, Rolex, and Saint Laurent are also set to enter or upgrade. New World's mid-term results for the end of last year showed that K11 MUSEA's occupancy rate remains at a high level of 98% The second phase of the upgrade is expected to begin in 2027 to 2028, focusing on other high-end lifestyle and trendy brands, while the third phase is expected to be completed in 2030, with specific brand categories depending on market trends and consumer preferences at that time. Strong Consumer Spending Power Among Members, With High-Spending Customers Spending Over 20 Million Year-Round The landmark brand upgrade has shown results, with New World stating that foot traffic at K11 MUSEA has repeatedly reached new highs since the second half of last year, with August's summer vacation and National Day golden week both recording the highest monthly foot traffic since opening; this year's Lunar New Year golden week saw a year-on-year increase of about 60% in tourist spending, making February the month with the highest tourist spending in over two years, an increase of 80% year-on-year. Membership Program Will Be Upgraded Member spending power is also strong, with New World indicating that the spending of the highest-level black card members rose nearly 10% year-on-year in the second half of 2025, with top spending members spending over 20 million annually. The threshold for black card membership is a spending of 400,000 within a year. Lin Haozhe pointed out that members aged 35 to 40 make up the largest proportion, and the team is introducing brands based on the preferences of this consumer group, also announcing that the membership program will be fully upgraded this year to provide more tailored exclusive benefits for eligible customers